With the economic recovery still being carried primarily by consumers — Business CapEx spending and hiring has been feeble — anything that put the consumer at risk is worth noting. So this little tidbit (spotted by an alert reader) was definitely disturbing:
"Real wages in the US are falling at their fastest rate in 14 years, according to data surveyed by the Financial Times. Inflation rose 3.1 per cent in the year to March but salaries climbed just 2.4 per cent, according to the Employment Cost Index.
In the final three months of 2004, real wages fell by 0.9 per cent. The last time salaries fell this steeply was at the start of 1991, when real wages declined by 1.1 per cent.
Stingy pay rises mean many Americans will have to work longer hours to keep up with the cost of living, and they could ultimately undermine consumer spending and economic growth.
So far, betting against the U.S. consumer has been a money losing proposition. When that bet finally does pay off, it may be a doosie . . .
Real wages fall at fastest rate in 14 years
By Christopher Swann in Washington
FInancial Times, May 10 2005 17:59