September 22, 2014

Economists watching interest rates closely

On July 3rd the U-S Department of Labor will release a report on wages and how much they have grown over the past year. That is what the Federal Reserve really pays close attention to. When wages go up interest rates follow.

Creighton University Economist Ernie Goss says this brings up the issue on how they calculate that rate. The two items that take the largest chunk out of the paycheck are food and energy. The Feds say food and energy are not factors in their inflation number because their prices constantly go up and down.

Goss says our economy is like a race horse. It is ready to take off and run but the government has a tight grip on the reins and won’t allow that to happen. He says first the government will have to change the tax policy. Goss says Japan is lowering their corporate income tax to 30%. With that move the U-S will have the highest corporate tax rate in all the advanced countries of the world and that is no place where we want to be. Goss says if the corporate taxes were lowered companies would bring those earnings home and use them to produce in America.

Goss says the personal disposable income of middle and lower middle class residents is much weaker than the growth in income because of taxes and other regulatory fees. He says the average yearly inflation is between 3% and 4% – well above most workers annual cost of living increase.