What has the lebron-wade-bosh event told us?
Each of them voluntarily ‘deflated’ their wages. While their ostensible reason is to chase a championship, you can’t help but think that part of the unconscious decision is a recognition that they don’t need the same income to purchase the same levels of goods and services.
The price of a gallon of milk hasn’t changed, but the largest consumer asset – a home – is still decreasing even with rates at all time lows.
We also know that for the first time in a long time C-level compensation is down in both public and private companies. Now ask yourself who essentially drives wage and purchasing decisions across the organization? They are also accustomed to a lifestyle that is (x)% better than others. While they would never openly acknowledge this motivator on an individual level, you can’t help but think they will strive to keep that ratio the same – thereby driving costs and wages down across the entire economy.
The money supply is also shrinking. Banks are reluctant to lend. Consumers have recognized the long overdue reality that debt is not a good thing. We’re settling debt for pennies on he dollar.
Finally, it seems (and I’ve looked at an admittedly small sample) that any increase is earnings lately is due to expense reduction rather than actually making more money.
All of our economic thrust is being driven by artificial means – government stimulus. It seems that there are a lot of downward pressures on our economy
Wise man say, “am I wrong or am I wrong?”
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