The "everything bubble" - except in labor and wages - is investable not a solid foundation to build on

Seen some recent surprise lately in the financial press that the consumer economy isn't growing so fast - perhaps even shrinking - and companies are cutting back production globally. Central bankers seem surprised by rising asset prices. Even the NYT got into act with a recent opinion "Welcome to the Everything Boom, or Maybe the Everything Bubble."

The article unfortunately neglects to highlight the one asset not in a boom or bubble. That asset is labor.

Six years into the recovery from the great recession, employment levels still remain far below precrisis level when looking at various participation rates. Our foundation remains shaky.

None of this is seems exceptionally surprising (or newsworthy). Low interest rates incentive speculation and speculation causes asset prices to rise. From the perspective of a patient investor, at this stage of the recovery, the hint of rising rates is leading to increased industry consolidation at high multiples using inflated assets like equity and still cheap debt. Hooray for asset holders!

But what about the non-capital owners?

Savers and marginalized workers - especially the young and indebted - have not participated in this recovery. That's not necessarily unique. It took 10 years for post-depression employment levels to return to pre-depression levels according to a 2012 essay from the Richmond Fed ...

... and we should expect a long slog until a solid foundation now.

The investor in me remains bullish about opportunities to invest in companies. But until we start to incentive savings and invest instead in variable costs like labor (and maybe do away with the depreciation tax shield) the consumer economy - the entire economy - will remain driven by speculation in asset prices. It is a very investable theme but it is not the recipe for a stable economic foundation to build on.