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Pro Analysis

Santoli: This is a bigger worry than Brexit

Traders from BGC, a global brokerage company in London's Canary Wharf financial centre react as European stock markets open early June 24, 2016 after Britain voted to leave the European Union in the EU BREXIT referendum
Russell Boyce | Reuters

A fractured Europe has often sought help from the U.S., and in recent economic downturns this has meant looking for the American consumer to carry the load.

Yet even before the vote last week by citizens of the United Kingdom to depart the European Union that jolted markets and raised fresh economic worries, there were starkly conflicting signals on whether the once-reliable stateside consumer is on sturdy or shaky footing.

The U.S. stock market has reflected this confusion for months. While a broad economic examination of consumer health looks quite encouraging, investors are also watching emerging symptoms of financial stress in household finances and notable weakness in consumer-reliant stocks.

The reassuring diagnosis from the economists begins with a rather tight labor market, even after the conspicuously weak May employment report. Job openings are at record levels, layoffs remain at multi-decade lows, and wages have been growing faster than consumer price inflation for a long stretch.

A relatively new measure of worker income, the Atlanta Fed Wage Tracker, is a picture of improving bargaining power among employees. This version of the gauge, showing wage growth by those who switch jobs, shows rapid acceleration of earning power for mobile workers.