When making an economic forecast, whether it is for the global economy or a specific nation, one of the most fundamental inputs is the growth of wages for the average citizen.
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New York, NY (PRWEB) December 07, 2012
In a recent Investment Contrarians article, editor and financial expert Sasha Cekerevac reports that recent data from the Bureau of Labor Statistics shows that real wages, which take inflation into account, are on the decline, and have fallen every month since February 2011 except one, in which real wages were flat. (Source: Bureau of Labor Statistics, last accessed November 29, 2012.) According to the Investment Contrarians expert, without real wages growing, the wealth of the average citizen continues to decline, which is not good news for the already weak U.S. economy.
“When making an economic forecast, whether it is for the global economy or a specific nation, one of the most fundamental inputs is the growth of wages for the average citizen,” notes Cekerevac. “Since consumer demand supports so much of the modern economy, especially in the U.S., a lack of wage growth will certainly filter into a weaker overall economy.”
Cekerevac points out that while there have been some improvements in the number of jobs created this past year, there has not been any improvement in wages or any sustained increase in income.
However, Cekerevac notes that he’s not the only one that has reduced expectations for economic growth; citing the Organization for Economic Cooperation and Development (OECD), Cekerevac reports that it now expects that the global economy will grow 2.9% this year, versus an earlier estimate of 3.4%.
“The OECD has also drastically reduced next year’s economic forecast for the global economy to 3.4%, versus an earlier estimate of 4.2%,” adds Cekerevac. “The OECD economic forecast for America was cut as well, for which the organization now estimates growth in 2013 of two percent, versus the earlier economic forecast of 2.6%.” (Source: “OECD cuts global economic forecast over eurozone risks,” Reuters, November 26, 2012.)
According to the Investment Contrarians expert, the important thing when looking at any data point is the direction of revisions.
“When you see an economic forecast continually being revised downward, this is a sign that the underlying strength is much weaker than expected,” Cekerevac reasons. He concludes, “When [one] combine[s] a lack of growth in the global economy with declining real wages for American citizens and the looming fiscal cliff, the future appears to be quite difficult.”
To see the full article, and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.
Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”
The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing, and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work, and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.
After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.
Investment Contrarians provides unbiased research. They are independent analysts who love to research and comment on the economy and investing. The e-newsletter’s parent company, Lombardi Publishing Corporation, has been in business since 1986. Combined, their economists and analysts have over 100 years of investment experience.
Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.
George Leong, B. Comm., one of the lead editorial contributors at Investment Contrarians, has just released, “A Problem 23 Times Bigger Than Greece,” a breakthrough video where George details the risk of an economy set to implode that is 23 times bigger than Greece’s economy! To see the video, visit http://www.investmentcontrarians.com/press.