It recently emerged that new unemployment claims rose 8,000 in the last week of January. The development stoked fears that global economic slowdown was starting to undo the recent gains in the U.S. labor market. However, according to Carl Tannenbaum, the chief economist at Northern Trust, there is actually a brighter side to the January’s dim employment numbers. Nevertheless, the trend in which U.S. companies are shifting their tax addresses to European countries with low tax rates threatens not only the labor market but also the overall economic health. Such maneuvers deny Uncle Sam the much-needed tax revenues and also put a strain in the domestic job market because of layoff risks.
The U.S. job market
In January, a smaller than expected new jobs were added in the U.S. labor market. The 151,000 positions added in the quarter were also smaller than the numbers of jobs that were added in the past months. In the construction sector, the payroll increase was 30,000 less than the increase registered in December. However, Tannenbaum thinks that fair adjustment of the construction job numbers and the over economy shows that things aren’t as gloomy as they may appear on the surface.
Additionally, Tannenbaum notes that wage increases bode well for the economy. The reason is that people spend more when they earn more, thus helping lift many sectors of the economy. Perhaps that explains that it is only a matter of time before the U.S. labor market strengthens again as more companies boost their minimum wages.
More people dropping U.S. citizenship
The U.S. Treasury Department recently provided data that to some extent send a chill down the spines of many. It turns out that people are increasingly cutting ties with the U.S., and those include corporate citizens. In 2015, the Department says that about 4,300 people renounced their U.S. citizenship or dropped their long-term permanent residency. To put that in perspective, the number of people cutting links with the U.S. rose by 25% in 2015 from 2014. It turns out that tightening regulations on holding of foreign accounts might be fueling citizen exits from the U.S.