Lower labor cost, higher consumer spending ‘unsustainable trend’


Business Insider is reporting that corporate America’s quest to squeeze labor cost may be nearing the point to taking a bite out of their bottom line.

According to Gerard Minack of Minack Advisors, “Consumer spending is around all-time highs as a share of U.S. GDP, while labor income is at multidecade lows. This has been wonderful for corporates: consumer spending boosts revenue, while labor costs are the corporate sector’s largest single cost. Rising consumer spending and falling wage share of GDP is great for profit margins

But this peculiar trend is obviously not sustainable. “Now, however, further wage weakness threatens to suffocate the U.S. consumer,” he said.

CLICK HERE for the full report.

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