Real Averge Hourly Earnings
In August real average hourly earnings fell fell -0.6% as nominal wages fell -0.1% and the CPI rose a stronger than expected 0.4%. On a year-over-year basis real average hourly and weekly earnings are down -2.4%.
With real wages falling so steeply no wonder the retail sales report was weaker than expected.
I continue to stick with my position that with wage growth so weak the economy can not sustain accelerating inflation. Higher inflation will lead to a weaker economy, not an inflationary spiral.
According to your graph, a recession followed a drop in earnings in all except one case. It looks like we are in for a double dip.
Spencer it would be hard to disagree with your point that inflation would further harm the economy assuming no wage growth. I would think real growth in MEDIAN hourly wages, contributing to somewhat higher inflation, would be a positive development. (Now, how to encourage this after all these decades!)
Go to the GDP tables click the options tab for the entire series “Household Income” beginning in 1948 to 2010 . Then click for the graph. Notice that from 1948 to 2009 Household Income went up every single year. That changed in 2010 – Household income actually went down in 2010 – that is not even adjusting for inflation.