The Kern Economic Journal is a quarterly publication (February, May, August, and November). Its purpose is to track and analyze economic trends that affect the well-being of Kern County. In doing so, the journal provides primary data on consumer confidence and business outlook as well as secondary data on a wide range of economic indicators. These data help the community make more informed decisions. Sources of funding for the journal include university contributions and sponsorship fees.
The world’s largest economy of nearly $17 trillion, the United States, grew by a slower than expected 2.6 percent in the fourth quarter of 2017, a decrease from the 3.2 percent growth seen in the previous quarter. The increase in real GDP reflected increases in consumer spending, business investment, exports, housing investment, and federal, state, and local government spending. Imports, which reduce GDP, increased. Similar offsets to the growth in GDP occurred due to declines in inventories, which may signal that the higher-than-anticipated economic growth of 2017 was not matched by commensurate sales in the consumer space.
As enter the holiday season, we have seen an uptick in labor and property incomes that have outpaced the fall in business incomes, with a nearly $500 million increase in personal incomes in the fourth quarter. Between the third and fourth quarters of 2017, labor incomes increased by nearly $1 billion, property incomes increased by $31 million, and business incomes fell by nearly $500 million. This indicates that employers are likely shifting costs in anticipation of minimum wage increases, as well as tax cuts that will start in 2018. This means that personal incomes grew by 6.85-percent in the fourth quarter of 2017, outpacing the third quarter growth that we saw. This is important, as personal incomes fell for three consecutive quarters (2016.4 to 2017.2), indicating that with tax reform, we should see continued economic growth into 2018.
Starting in January of 2018 many states including California as well as some cities will be increasing the minimum wage rate to as much as $15.00 per hour. There has been a mixture of feelings regarding this movement with some business leaders suggesting that small business cannot absorb these new rates while wage increase proponents speak of fairness and economic equity.