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Unexpected Outcomes – Monday Musings 07/06/2021
Couple of interesting items this week, one here in the UK and one in the USA. Although they are two different stories, they have a commonality. There was a story in the press this week about the number of jobs that two graduates in the UK were offered in one day having spent ages pre- covid being unable to find work. The jobs were mainly in the hospitality industry with warehousing and supermarket checkout thrown in. So, the lack of staff is having a major impact on the wage levels being offered, good for my son, but may help to fuel wage inflation which could of course feed into inflation in general. So, it’s a bit like low interest rates which are good for borrowers but not so for investors. Higher wages are good for the workers but could have an impact for borrowers as one of the ways that Governments and Central Banks control inflation is by raising interest rates. By the way Tim Martin of Wetherspoons who was a major champion for Brexit is one of those moaning about the lack of European workers available for his pubs😊.
On the other side of the pond Mr Biden unleashed a massive and very welcome support package for folks who have been badly impacted by the pandemic when they lost their jobs. The problem is that a lot of lower paid workers are happy to live on the boodle from El Presedente rather than going back to work. You’ve guessed it, wage inflation which may well drive inflation in general. Then as above.
This goes to show that almost every decision that is made in economics/ politics even with the best of intentions can have unexpected outcomes. I guess the question is whether the decision was the right one anyway.
So, to the markets
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