A 2015 Comeback for the Middle Class?

extinct

One of the most interesting predictions I’ve heard made about 2015 is that this would be the year the economy finally outperforms the stock market in the US. Who knows, but I wouldn’t mind if that were the case. For one thing, it would help a lot of people who’ve been “left behind” by the new bull market because they simply don’t can’t participate. For another, it would defang the bubble-calling bears and provide some much needed “justification” for the ebullience apparent in the S&P 500 these past few years.

Stocks are only definitely expensive if they’re not foreshadowing a roaring economic comeback. If they are, then valuation becomes much more easily debated (should a market where corporate earnings are growing by 8%, rates are zero and inflation non-existent sell for less than 17x earnings? Why?).

The cartoon above, by Ed Gamble, demonstrates the current narrative about the lost middle class amidst a highly exclusionary economic expansion that favors capital owners versus workers. And all of the data backs it up, unfortunately, including Friday’s December NFP report which included more jobs but no wage growth. Henry Blodget posted some remarkable charts on the subject a couple of days ago that show a highly one-sided, completely unsustainable divergence between the top 10% of American income earners / captains of industry and everyone else. Here’s one, as an example:

WAGES AS A PERCENT OF THE ECONOMY (lowest in history)

wages
But what if that’s on the verge of changing? What if there aren’t enough workers and wage pressure manifests itself across the economy for the first time in more than a decade? Under this scenario, it’s high plausible that the economy goes berserk while corporate earnings (and, by extension, stocks) take a pause as margins contract a bit.

Would that be so terrible?

Conor Sen has an interesting view on the potential for wage inflation in the near future that I’d encourage you to consider. Check it out at the link below:

The Biggest Looming Source of Inflation: Non-College Educated Men (csen)

Read Also:

Way To Go, ‘Capital’! You’re Totally Crushing ‘Labor’! A Few More Years Like This And You’ll Win!!! (Business Insider)

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Toshiba 50HM66 manuals commented on Jan 19

    … [Trackback]

    […] Read More Information here to that Topic: thereformedbroker.com/2015/01/11/a-2015-comeback-for-the-middle-class/ […]

  2. JBL Car subwoofers manuals commented on Jan 23

    … [Trackback]

    […] Here you will find 2181 more Info to that Topic: thereformedbroker.com/2015/01/11/a-2015-comeback-for-the-middle-class/ […]