Economic Problems Abroad Can Help The US Economy

NEW YORK, NY - APRIL 11: A man stands in front of the BP gas station at the iconic SoHo location of Houston and Lafayette streets on April 11, 2013 in New York City.

Photo by Mario Tama/Getty Images

We got some excellent news on the real wages front this week, namely that hourly earnings rose from February to March. They rose even though nominal earnings were flat, because gasoline got cheaper.

Kevin Drum had a good post yesterday about gloabl oil supply constraints in which he said “Any time you see a medium or long-term forecast of global growth that doesn’t mention oil constraints, you should probably take it with a big grain of salt”. You should probably swallow a whole salt shaker before taking any long-term growth forecasts seriously, but I think this applies in the short-term as well. And it applies in both directions. It’s easy to look at bad economic news from Europe and think “bad news.” But in a world of slightly confused monetary policy regimes and constraint global oil supplies, it’s more complicated than that. When French unemployment rises and French oil demand falls that means higher earnings for American workers.