Not so hot, friends and countrymen, not so hot at all.
This morning’s reports on consumer prices and inflation-adjusted earnings, what they call “real” earnings, were both broadly flat, and when flat is not what you’re looking for, not what you’re looking for at all, that’s not a very good thing.
Consumer prices excluding food and energy, the s0-called core prices that get so much derision when everybody thinks the government’s trying to mask inflation by excluding those two categories, were flat, the Bureau of Labor Statistics reported. On a yearly basis, prices were up 0.9%. When you consider, too, that the Fed kept its fed funds interest rate at zero that whole time, then those numbers are very precarious indeed.
The news on wages wasn’t any better. Average hourly wages were flat in August compared to July, and up 0.5% compared to a year ago. If you think a 0.5% raise over a year is enough to cover all the necessities of life, then God bless you.
What these two reports show is an economy that is basically stagnant, with a not-insignificant chance of getting worse. Wages aren’t growing, prices aren’t rising, and all that ties back to the fact that everybody is still in the middle of this great unwind, this broad deleveraging of debts. We aren’t going anywhere. Indeed, even a cursory glance at the news over the past day or two tells you we’re going backward: a Census Bureau report shows that wages fell over the past decade, while the bureau also reported that now one in seven Americans, 43 million people, are living in poverty.