The US labour market is experiencing the largest wage increase since 2009. The US labour market is close to zero-unemployment rate and if we stay optimistic about the US economy in 2017, more jobs should be created in the US, as companies will be more likely to keep their core factories inside the US. In addition, as the economy is expanding, more jobs are expected to be created in the new year. The expected increase in the US labour market demand is the key factor that pushes up the current wage level.
However, the wage level cannot continue to grow forever, there has to be a stop or at least a pause in the future. The US unemployment rate is historically low and there is not much room to improve. The working class could be encouraged by the increasing wage levels and we may be able to see a continuously increasing participation rate. While the increasing wage level could directly increase the costs of production in the US, the US companies need to balance their options of employing American more and more expensive labours and employing cheaper labours in other countries but suffering higher tariffs. There will be an equilibrium that the US companies could find an optimal point where they minimise their costs of production and distribute their assets and factories across countries. At this equilibrium, the wage level will stay at a constant level; moreover, at this level, the US economy should be at the periodic peak of its economic cycle, as the firms have maximised their profits at this point and are less likely to further increase their outputs.
Based on the economic cycle belief, the US economy will decline after it reaches the periodic peak. The slowing new job creation rate shows that the US economy is near the peak.
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