Past recoveries were haunted for a lack of job growth, but this recovery will go done in history as the wage-less recovery and it presents a bunch of conundrums for the stock market and frustration for the rest of America.
Average hourly wages of $24.78 were up just a penny month-to-month and dashed any hope that the big spike in January of 0.5% was the start of something big. Now, it looks like maybe January was an anomaly considering December saw a -0.2 decline in wages.
Wages are the key. Median household incomes are below levels before the Great Recession and this is why confidence readings continue to trail the increase in stock and home values since 2000. For the market, it doesn’t matter as much if more people earn less than the net amount in the cauldron to be spent (and remember those earning less tend to spend more and save less), still increases were underscored this morning with earnings from Footlocker (FL).
On that note, there has to be a big continuing tide of improved economic circumstances that triggers a virtuous cycle that not only helps the stock market, but makes Americans feel like Americans.
Yes, there is too much free stuff and self-pity going around that allows or enables people to chill out at home playing video games and maybe taking periodic breaks to head over to Footlocker. Consider how 317,000 fewer people reentered the job market in February versus a year earlier, coupled with the 178,000 departures from the labor force, and its clear, dropping out is too easy.
This is why the lower unemployment rate is a major disappointment this morning and in many ways overshadows the 295,000 jobs created.
The results today will not alter the action at the Fed, even if the market isn’t quite sure this morning.