[u][b]Why subdued employment costs are good for mortgage REITs[/b][/u]
"The Employment Cost Index is a quarterly index that measures the cost of labor to business
The Employment Cost Index (or ECI) is prepared quarterly by the Bureau of Labor Statistics. It’s the counterpart to the Consumer Price Index (or CPI). One way of thinking about ECI is that it’s the wage side of the wage-price spiral, while CPI is the price side. The Employment Cost Index is used as an input into government salaries and is often cited by the Federal Reserve when setting policy.
The ECI breaks out the cost of private- and public-sector workers, including changes in compensation and benefits. The results are further broken down into occupational groups. The biggest use of the ECI is to identify wage-push inflation. Wages growth has been generally subdued since the Great Recession began and benefits, specifically health insurance, has increased.
Highlights of the report
Employment costs increased 0.4% in the quarter ending September 30, flat from the 0.4% increase in the fourth quarter of 2012. Wages and salaries (which account for 70% of the index) increased 0.3%, while benefit costs increased 0.7%, an increase from the 0.4% jump in the third quarter of 2012.
Goldman Sachs is very bullish for the US economy in 2014 and beyond! Another great sign for mreits like BMNM and ORC
David Kostin, Goldman Sachs' top equity strategist, just published his 2014 outlook for stocks. His report also included his lofty prediction for the S&P 500 through 2016.
Specifically, Kostin sees the S&P 500 rising 6% to 1,900 by the end of 2014, 17% to 2,100 by the end of 2015, and 23% to 2,200 by the end of 2016.
"Our  return forecast reflects rising, albeit decelerating, profit growth and a slightly lower P/E multiple," said Kostin. "The linchpin of our market forecast is growth – in the economy, sales, and earnings. We expect 3.6% global economic growth. The US will advance at a 3% pace while inflation remains contained at 1.4%. China, Japan, and even Europe will all grow, expanding GDP by 7.8%, 1.6%, and 1.5%, respectively. Sales and earnings growth are a direct result of economic activity. We expect revenue growth of 5% (ex-Financials and Utilities) and overall EPS growth of 8% in 2014. Growth in these metrics should continue in 2015, 2016, and 2017."