Bloomberg | August 29, 2018
Searching for an explanation when too much recent economic data doesn’t fit together.
Economists like puzzles, and recent economic data have generated a fair share of them. For instance, the U.S. labor market recovery has been underway for years, yet growth in inflation-adjusted wages remains weak. More broadly, the male median wage still is in the general range of where it was in 1973. There is an investment drought, and yet corporate profits are relatively high. Some measures of monopoly power are up, even as the internet and the rise in foreign competition retain their potential to foster greater competition.
How do all these data points fit together? It’s an admittedly speculative exercise, but I’d like to offer a relatively simple unified hypothesis — namely, greater capital mobility.