United States, Salesforce, Twenty Twenty discussed on The Indicator from Planet Money

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Support for NPR in the following message. Come from mail chimp. So you're ready to make that side-hustle your remain hustle. Now what start with the all in one marketing platform from male champ. That's what it has all the tools you need to give your new business. The strongest wrong is start with the right marketing at male champ dot com support for this podcast and the following message come from salesforce a customer relationship management solution dilution committed to helping you deliver the personalized experiences that customers want salesforce bringing companies and customers together visit salesforce dot com slash learn more. Okay Dr is. Are you ready for the three trends. Yeah right so are we going bad. I I think we're going to go with a trend. That was really bad in two thousand nine hundred ninety nine and we'll talk about whether or not it might turn around in twenty twenty and it's this business. Investment K Yeah so business investment vestment by the way is the money that company spent on things like buildings plants equipment research stuff like that and last year. The amount of that money that company spent on these things stopped growing and in fact growth in business investment turned negative so that it shrank. Yeah did it shrink by a lot no not by it ton but the fact that it was shrinking is notable because the economy overall was growing and people were spending money and so. There's this kind of interesting question. It just why that was and there are a few different theories here. The main one is the trade war has been causing a lot of uncertainty in the global economy. And that has made eight companies kind of hesitant to invest. Because they just don't have much clarity on what the future's going to look like so there are a little bit nervous about spending the money now but also it's possible that some some of that sluggishness in business investment was a one off trend in the energy sector or in the aviation sector and so it might rebound in the coming year so the question Now is will business investment in fact make a big comeback in twenty twenty and I would point to one thing as possibly hopeful sign at the end end of last year. The confidence of CEO's had started to go up after it had reached a really low point in the middle of the year and so that suggests that maybe CEO's or becoming a little bit more confident about the economy the direction it's going in the trade war maybe they'll start investing again. How right so yet? To yet to be scene if twenty twenty will will be will continue the trend if this bad trend will turn around or if it will continue right. That's one thing we're going to be watching number to to write a trend that was Kinda Meh last year can mixed and so the question for this one is will go in the right direction or will it turn in the wrong long direction and here it is. Wage growth was stagnant last year. Right here we hear a lot about this. This is this is why a lot of average people aren't necessarily feeling Ling the impacts of a good economy. Yeah I mean there's a few things going on here but the really baffling things. The labor market overall last year was pretty strong right. We were still creating a a lot of jobs but overall for some reason wage growth did not accelerate the way people expected it to okay. So here's something interesting. That happened last last year. Okay of the people who month to month go from being not employed to then getting a job almost three out of four for those people were not even looking for a job the month before and tryst and with a lot of people coming back into the labor force exactly and that's a big deal because it suggests that the economy still needs to create a bunch more jobs before workers have the kind of bargaining power that would lead to accelerating wage growth so this is a huge deal. I mean when you're talking about wages you're talking about something really tangible. I know how much is in my paycheck. I know what that affords me right. The chance to provide for my family the chance. Sometimes too. You know indulge in something. Nice whatever I have a sense of it and that's what wage growth is all about. That's why it matters so much healthy reminder that economics isn't just a game affects people's lives absolutely it. Bears reminding you to lose sight of that. I think we we should remind people and also if it leads people to recommend a certain podcast. I it's quite good at explaining these trends. Then why not liking subscribe wherever you find your pockets exactly Okay so the last trend. This was something that was really good in two thousand nineteen gene. And we're all hoping we'll continue in twenty twenty two good stuff. The good is dollar on me. It is simply consumer spending. Will people keep keep increasing the amount of money that they spend in the economy which is of course what drives the US economy and also to some extent a chunk of the world economy enemy because of course US imports a lot of goods from other parts of the world. And so the question is will Americans keep spending money keep increasing the amount of which we spent a lot of this past year a healthy amount I would say so roughly last year the US increased. How much money spent by about two and a half percent after you just for inflation? That is roughly in the range of what it has been for the last three years when the labor market has stayed strong and when the economy's continued growing and to the question is will the US consumer keep spending it roughly the pace of increase it has been spending at for the last few ears. Some pretty hopeful signs here. The Federal Reserve has suggested that it won't try to slow down the economy anytime soon that it is is comfortable with where the economy's ad so that's one thing another thing. The housing market and the stock market did quite well in the second half of last last year and that can have in fact on the amount of money people are comfortable spending. But here's the thing. Consumer spending is also something that can get hit quite suddenly quite hard. There's a big economic surprise and who knows what we're going to get going into next year right. Will the trade war sort itself out what's going to happen in the political realm with the impeachment and the election coming up. That's something I'm going to be watching all year and at the end of the day. Humans are not perfectly rational all of at the time and so you may be hard to predict exactly how people feel about spending money. It's not quantifiable thing. This is something that economists are studying. Stunning increasingly and again. That's hard to predict what will the narratives be in twenty twenty that become contagious. In that end up having a big influence on how we behave so let me make sure got this all all right. The three things that we are watching but not predicting is correct. Businesses weren't spending enough. Maybe they'll spend more wages. Were flatter than we'd like maybe they'll grow faster consumers. Were spending a good amount. Let's hope they keep spending. Yeah that's exactly right all right. So there's your Educated hypothetical non predictions for twenty twenty. If you lose all your money in the stock market on us that's right and by the way we'll we'll post charts and links to describe some of these trends over at NPR dot org slash money. Dr Is always a conversational pleasure. Thanks for having me. This episode of the indicator was produced by Lena Sons. Gary our editors Paddy Hirsch. Our fact checker is Nadia Lewis Indicator. Peter is a production of N._P._R...

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