Issue link: http://palletcentral.uberflip.com/i/990149
26 PalletCentral • May-June 2018 palletcentral.com Economic Outlook: Labor Shortages Lead to Higher Wages and Eventually Higher Interest Rates As mentioned earlier, the economy is pretty much on track. The overall economic growth as measure by Gross Domestic Product (GDP) is up nearly 3% since last year. Consumer spending remains very healthy. Spending by business on investment has also picked up. Government spending is finally positive as well. As discussed in the last update, industrial production of manufactured goods continues to do well. Growth has been very strong over the last 6 months and is up 2.5% from year ago levels. Everything is pointing to strong economic growth to continue through 2019. Consumers are very optimistic. Businesses have seen their profits improve due to lower taxes. The small business optimism index is extremely high. Thus, businesses should keep pushing investment levels higher. Finally, tax revenue is surging for State and Local governments (S&L). Historically, when they get it, they spend it. The S&L governments account for 11% of GDP vs only 7% for the Federal Government. But there is the dark side to this otherwise bright picture. The labor market is getting extremely tight and wage rates are finally starting to show the strain. Unemployment fell to 3.9% last ECONOMY As inflation moves higher, the Federal Reser ve may be forced to move rates higher and faster than currently planned.