2. Average Hourly Earnings
5% | — Average Hourly Earnings (%YoY)
— — Average Hourly Earnings of Production and Nonsupervisory Empoyees (%YoY)
4% |
3% 4
2% 4
1% |
0% t t t t t t t t t t t t t t 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Note: Average hourly earnings is available for the private sector starting in 2006 and is released
in the monthly employment report. The BLS hourly earnings data for production and nonsupervisory employees, ~80% of the private sector, is available back to 1964.
Source: Investment Strategy Group, Haver.
3. Measures of Core Inflation: Core PCE and Core CPI
6% > —Core PCE YoY = -=— Core CPI YoY 5% A%
3%
YoY %
2%
1% |
0% t t t t t t t t t t t t t t 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Source: Investment Strategy Group, Haver.
Of course, the recent backup in interest rates is providing equity investors with another source of angst. Yet our work suggests there are several reasons why rates could continue to rise before becoming a material headwind for stocks. First, the 4% trend growth rate of nominal US GDP— reflecting 2% real growth and 2% inflation—remains comfortably above the 10-year Treasury yield of
4
HOUSE_OVERSIGHT_026912