Are wages and consumer strength growing?
According to 73% of economists in a USA Today survey, wage growth will pick up in 2014. One analyst said wages could increase by nearly 3% this year.
Yahoo Finance Editor-in-Chief Aaron Task was not convinced that wages will accelerate this year. He's also skeptical about wage inflation. “They think if the economy grows and corporations are going to give people a raise, and [then] wage pressure is going to be here,” he said. “I would love it if it were true, but there is really no evidence that wage inflation is coming any time soon.”
Task said U.S. consumers are doing better than they were a few years ago, but prices for food, college, healthcare and automobiles are all going up. So, he doesn’t see wage inflation coming. Even if it does, he doesn't expect it to impact the broader economy.
Consumer spending affects retailers, and there will be a lot of retail data released this week. The Commerce Department will release April retail sales tomorrow, Macy's (M) will report its earnings on Wednesday, while Wal-Mart (WMT) and J.C. Penney (JCP) are set to post results on Thursday.
Task said this week’s numbers could be a mixed bag like some of the retail data from last week. Gap (GPS) showed same store sales rose 9% in April, but Ralph Lauren’s (RL) warned earnings for full-year 2015 would be below estimates. He said it’s a matter of what the retailer has to offer in their store. Task said Americans are shopping because job growth has been good, but it's too soon to conclude consumers are spending on nondiscretionary items.
Task was a little optimistic, though. “People are feeling a little more confident now,” he said.“We see that in the confidence numbers, and some of the retail sales numbers have been solid; but again, I think it’s a stretch to say, wow, we’re going to have this runaway spending spree by the U.S. consumer.”
Our poll today asks, “Have you seen an increase in your wages this year?” Cast your vote, and post your comments. Let us know if your wages have gone up or if you’re spending more or less the same as you did a few years ago.
