January columns are full of predictions. Yet as any good journalist (or market participant) knows, making them is a risky business. So rather than tell you in this first column of the new year exactly when the market will crash or what the midterm elections will bring, I am going to say which are the most important topics to watch in business and economics in 2018. Regardless of which way they turn, the following three issues will move markets.
First and foremost, wages. Will they finally grow robustly and broadly or not? Over the past decade, the US has seen a jobless recovery followed by a wageless recovery. There are plenty of jobs now — just 4 per cent of Americans are unemployed — and, over the past 12 months, wages started to grow as well.
But it has been too little too late and, for the most part, too concentrated at the extreme ends of the spectrum. Lower-level workers (in home healthcare, hospitality and retail) and superstars in high wage fields (such as the financial services industry) have seen gains, but most of the rest of us have not.