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Insights into income

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Another day, another entry on the Trump Twitter feed dismissing a member of the administration. This time, it is the Secretary of Veterans Affairs, sixteenth in line for the presidential succession and not perhaps a key figure in the minds of most investors. However, uncertainty is always a key risk in the minds of most investors.
  • US personal income and spending data is due today. US income growth is hovering around 4% y/y at the moment. The is far above average hourly earnings growth, partly because 1) average hourly earnings are not and never have been wage growth; and 2) structural changes, such as self-employment, mean people may receive income in non-wage ways.
  • German inflation numbers are due. Labor market strength has led to higher wage settlements. Combined with the overall strength of the economy, this suggests that underlying inflation pressures are building. This supports an end to the ECB's unnecessary bond-buying program.
  • The UK is revising fourth quarter GDP from the end of 2017. The UK's Office of National Statistics has offered surprise revisions quite frequently in the past, but markets tend to put their faith in the inaccurate initial data and pay less attention to subsequent revisions.