Publications

Justin Lahart of the Wall Street Journal writes that if employee wages begin to rise and inflation remains muted, corporate profits may suffer. Lahart argues that if companies begin to absorb higher labor costs in the absence of inflation, investors could experience losses. WSJ

Andrew Van Dam of the Washington Post writes that most of the decline since 1999 in the share of Americans with jobs is due to an aging population. Van Dam also points to recent research that shows that the rest of the decline in the share of Americans with jobs can be explained by trade with China and the rise of robots, while other common explanations such as immigration have had little to no effect. WaPo

The Financial Times reports that rising interest rates and recent changes to the U.S. tax code are squeezing major utility companies. Due to the relatively regular flow of earnings and dividends from these highly-regulated utilities, their shares traditionally behave more like bonds, thus falling when interest rates are expected to rise. FT

The Wall Street Journal reports that Federal Reserve Vice Chair Randal Quarles believes that the Fed should continue to gradually raise interest rates over the course of 2018. Quarles also said that the U.S. economy appears to be performing well and that monetary policy remains accommodative, which could mean that the “investment drought” that has afflicted the U.S. in recent years may be lifting. WSJ

Harriet Torry of the Wall Street Journal writes that a new study from the McKinsey Global Institute shows that the adoption of new technologies may cause U.S. productivity growth to rebound in coming years. The study shows that the widespread adoption of new technologies can take decades, meaning that the productivity benefits of digitization may still take years to be realized. WSJ

According to the Wall Street Journal, the bipartisan spending agreement reached by U.S. lawmakers has caused economists to raise expectations for Federal Reserve rate hikes this year. Market-watchers expect that the expanded government spending, along with recently-passed tax cuts, will provide a fiscal stimulus that will cause inflationary pressures to build more rapidly than before. WSJ

Greg Ip of the Wall Street Journal reports that increasing U.S. oil production has changed the relationship between oil prices and economic momentum in the U.S. Though higher oil prices used to be tied to slower economic growth, the surge in U.S. oil production means that the burden of increasing prices is increasingly offset by expanding energy investment, production, and jobs. WSJ