Why Einhorn Believes Consumers’ Personal Incomes Will Rise



Einhorn on job growth

Billionaire investor David Einhorn believes that there will be a higher number of jobs in the economy. According to a report provided by the US Bureau of Labor Statistics, in January and February 2017, non-farm payrolls saw stronger improvements.

In January 2017, there were 227,000 jobs added to the economy, and in February 2017, there were 235,000 jobs added to the economy. The improvement in non-farm payroll figures indicates that there’s higher job growth (VFINX) (VOO) (IWM).

Einhorn also believes that because there will be a higher number of jobs in the economy, the economy may face a labor shortage. A shortage could lead to higher wages for existing jobs, indicating that personal incomes will be higher.

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Will the Fed’s gradual rate hike process add any value?

Einhorn has also considered the Federal Reserve’s gradual rate hike process. He believes that because the Fed will likely continue its process in the economy, interest rates will be higher (SPY), leading to higher interest income on investments. All these steps indicate that consumers’ personal incomes will be higher.

In the next part of this series, we’ll analyze Einhorn’s view on General Motors (GM).


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