January 09, 2013 | By Scott Minerd, Global CIO
"Despite the economic headwinds resulting from the fiscal cliff concerns in December, the U.S. economy has shown surprising resilience. Data on wages and hours worked have both picked up over the past several months, which is supportive of future employment growth. Importantly, it also appears as though wage improvement will offset tax increases in the coming year. At the state and local level, the U.S. is forecasted to enjoy the most significant job growth in over half a decade. Contribution to overall GDP growth from the state and local sector is expected to finally turn positive in 2013 after being negative since 2009.
As the pent-up demand for capital expenditures and hiring from the fourth quarter enters the market, U.S. economic growth is set to continue. All of this news is particularly positive for the stock market, which has already made up losses from the fourth quarter of 2012 and is poised to continue higher."
The U.S. non-farm job reports over the past two months showed solid gains in payrolls, working hours and earnings. The aggregate weekly earnings in the U.S. non-farm private sector, which are the product of average hourly earnings, average weekly hours, and total non-farm private payrolls, increased at an annualized rate of 4.0% in 4Q2012. Since bottoming in October 2009, the aggregate earnings have increased 13.3%, of which the increase in average weekly hours contributed 2.4%, the increase in average wages contributed 6.1%, and payroll gains contributed the remaining 4.8%. The solid gains in aggregate earnings should provide substantial support for U.S. household disposable income.
Source: Bureau of Labor Statistics, Bloomberg, Guggenheim Investments. Note that level at October 2009 =100. Data as of 12/31/2012.
This article is distributed for informational purposes only and should not be considered as investing advice or a recommendation of any particular security, strategy or investment product. This article contains opinions of the author but not necessarily those of Guggenheim Partners or its subsidiaries. The author’s opinions are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC. ©2015, Guggenheim Partners. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information.
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