Macro Commentary
Meet me in the middle. An analysis released this week by the Federal Reserve Bank of New York indicated that middle income jobs (those paying between $30,000 and $60,000 per year) are finally being created. Since employment in the United States stabilized in 2010 after the financial crisis, the economy has added back nearly 15 million jobs. However, most of those jobs have been at the ends of the spectrum – those paying less than $30,000 or paying more than $60,000. In the period between 2010 and 2013, only about one-fifth of jobs created fell into the middle category. In the following two years (2013-2015), the middle income category led job gains. This is an important trend to monitor for two reasons. First, as a consumption led economy it is critical to have a sustainable (and employed!) middle class for economic expansion to continue. Recent data points suggest that after a bit of a slowdown in recent quarters, the US economy may be increasing the pace of its growth in the third quarter. Improvement in the employment of the middle class will help. Second, rising income inequality is a major global issue and a driver of the fractured political climate. This issue is just as central in the United States and will be a topic for debate in the upcoming Presidential election. Popular sentiment remains in the belief that many of the benefits in the post-financial crisis recovery has gone to a narrow portion of the population. That feeling will color the election rhetoric whether it be in regards to tax policy, trade agreements, or regulation.