June 1, 2018 Patrick Oliver-Kelley

The economy has been growing for almost 10 straight years. The unemployment is 3.9 percent for the first time since 2000. And yet wage growth remains stubbornly mediocre. How come?

There is no single answer. But the power of American companies, relative to the power of workers, seems to be a big part of the story. Companies are bigger than they used to be, sometimes dominant in their particular industry. — and labor unions are far weaker. If workers don’t like their paychecks, they often do not have an effective way to demand higher wages or find a higher-paying job.

This power mismatch between companies and workers is a long-running story. Corporate profits have surged since the 1980s. but not so for workers’ pay and benefits. The shortfall is equal to about 4 percentage points of G.D.P. — which works out as $6,000 per household every year. We are talking about real money.

One of the more important ways companies have gained the upper hand over workers has been legal changes that have made it harder for workers (and consumers) to band together and exercise power. A very business-friendly Supreme Court is likely to continue the trend as it ruled 5-4 that makes it much more difficult for workers to fight back against companies they believe are engaging in wage theft, discriminatory pay practices or some such.

While Mr. Trump’s foreign policies have not, yet, caused serious losses in the stock market, investors’ stoicism could face greater tests soon. Earnings growth for corporate America this year probably peaked in the first quarter. And since neither the E.U. nor China looks close to caving to Mr. Trump’s threats, global trade tensions look set to escalate.

The big question: How hard will the U.S. crack down on allies who do not go along with sanctions — is this another trade fight?

The value of the dollar has further to fall and that fall may come in concert with the global economic recovery we have been discussing over the past eighteen months. Trump’s tariffs risk igniting a global trade war that could scuttle the market’s sanguine mood and hurt growth globally. And nowhere is that fear of an undermined rally more evident than in the dollar’s value against the Japanese yen.

The dollar has fallen nearly 7% against the yen since its 2018 high on Jan. 8. That’s a nearly 34% annualized loss.

When the global economy is just starting to come out of crisis, the one thing that will absolutely disrupt the cycle is a trade war and this is Trump’s first salvo in the trade war. The yen is reflecting this faster, stronger and more intensely than any other instrument.

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