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Why does everyone have the same opinion on the economy?
If you look at the economy, it has been trending slow but steady. So I think what you are seeing is a belief that we are not going to see too much change from the trend. For most people the elephant in the room is how we are going to get through the fiscal cliff. If we find a way through, as I think we will, I think moods are going to improve a fair amount.
Does that improvement in mood include GDP of 2 percent plus?
If you look behind the scenes, there are a lot of crosscurrents. The homebuilding business is picking up. I think the Europeans are starting to get a grip on the situation. And the Fed’s low rates are driving investors out of cash into other assets. You can see the benefits of that flowing through the auto industry. What’s missing is the return of the animal spirits that inspire investing. It’s hard to revive those spirits when you have all this uncertainty. But we know the uncertainty will be resolved one way or the other quickly.
How will wages fare?
Overall compensation is growing less than 2 percent in the private sector. We are dealing with a severely under-employed labor force, and no one really has pricing power. After inflation, real wages are slightly negative. I think we are in the top of the fourth inning in terms of getting the job market back to what we would consider to be full employment.