Opinion: Whether it's Trump or Alexandria Ocasio-Cortez, politicians keep getting it wrong when it comes to the US economy. By pearkes.
If stocks are rising, there must be some combination of falling discount rates and rising expectations for the growth of corporate cash flow. The former can be a bit complicated, and the latter isn't necessarily a sign that the economy is picking up, but often is.conducted by Bloomberg showed $36 billion in bottom-line benefit to major banks from 2017's Tax Cuts and Jobs Act. Bank stocks rising to reflect that windfall would not tell you much about the economy.
Put another way, the stock market moving higher is a good sign that US businesses as a whole are doing well, and when US businesses are doing well, the broader economy usually is too. While the stock gains are good news, they are quite derivative. So it's reasonable to say that stock market gains don't have much direct impact on the well-being of typical people, and Ocasio-Cortez is correct to identify wages as a key metric of economic vitality for workers.
The best measure of wages, which adjusts for changing demographics and composition of industries, is the Bureau of Labor Statistics' Employment Cost Index . The ECI which measures wages and salaries is up 3% versus the year before as of the third quarter of 2019, more than twice as fast as the post-crisis lows in 2010.The distribution of wage gains has also improved along with the aggregate growth rate.
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