Things Are Getting Better.

Much buzz this past week when Walmart announced that it would be raising it's minimum wage.  Both Business Insider and the Fiscal Times note that the job market has strengthened and competition for entry level and lower skills workers has finally started to increase.  Simply put in order for Walmart to keep their employees they're going to have to pay more money.   The news out of Walmart puts some meat on the bones of what we've been seeing in both the participation rate in the job market {rising} and the unemployment rate {falling-see chart above}.  Other retail companies have since stated that they too would be raising wages for their employees.  

The prospect of rising wages added to the lower cost of gasoline is longer term positive for the economy.  While so far the evidence doesn't show that consumers have necessarily spent the gas savings windfall, that might start to change if they begin to get paid more.  

Look I think there are big changes afoot in how and when consumers are willing to spend their cash and not all of them show up in the traditional metrics economists use to measure the economy.  At some point I'm going to write about this but for now let's just say that irrespective of how the public purchases the things it needs, more money in the pocket eventually will loosen the purse strings.  Maybe not today, maybe not in ways we're accustomed to seeing it spent and maybe instead of spending it all the American consumer will finally do what they've been urged to do for decades and save some of their earnings, but spend it eventually they will.  When they do we'll see that old velocity of money ripple through the economy.

Finally in another sign the economic recovery is starting to reach down into lower levels of the economy, the Fiscal Times also notes that food stamp use has plummeted:

"Food stamp caseloads grew significantly between 2007 and 2011 as the recession and lagging economic recovery led more low-income households to qualify and apply for help, according to the new report by the Center on Budget and Policy Priorities released on Monday. However, the caseload growth slowed substantially in 2012 and 2013, and then fell by about 2 percent in fiscal year 2014. 

Spending on food stamps fell by 11 percent in 2014 as a share of the gross domestic product and by nine percent after adjusting for inflation.

Fewer people participated in the program in each of the 15 months between September 2013 and November 2014 than in the same month one year earlier, according to the most recent government data available.

Indeed, 1.5 million fewer people participated in the food stamp program in November 2014 than when participation peaked in December 2012, according to the new study. In 43 states, the average number of   participants was lower in fiscal year 2014 than in fiscal year 2013."

Next post Monday.