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Wednesday, May 10, 2006


The "roaring" economy

To some people, that roar is like the sound of the train bearing down on them in the story below:
Gloom At A Time Of Growth
Many Workers Feel Left Out Of Recent Spurt In Economy

The U.S. economy is strong these days when measured by macro-statistics, but sluggish wage growth, along with rising gasoline prices and interest rates are overshadowing the good economic news in the minds of most Americans.

"The gap between the economy from 40,000 feet and on the ground level just seems to get wider with every new report,'' said Jared Bernstein, chief economist for the liberal Economy Policy Institute in Washington.

The same week that the robust GDP numbers came out, the government also reported that worker compensation -- pay and benefits -- rose in the year's first quarter at an annual rate of only 2.4 percent, the slowest rate in seven years. That figure, Bernstein said, suggests that workers' wages aren't keeping pace with wage gains during past economic expansions, or even with inflation, which rose by 3.4 percent over the year ending in March as measured by the consumer price index.
Or, doing the simple math which the article's author didn't bother with, inflation-adjusted worker compensation declined at an annual rate of one percent. A "rise" of 2.4 percent sounds so much better. It just isn't reality.

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