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Income Stagnation: the greatest threat to recovery

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The most acute threat to the economic recovery that has begun is the same as the biggest chronic problem for the middle/working classes for the last 45 years: a lack of real wage growth. Only twice in the last 45 years has there been real wage growth (that is, wages growing faster than inflation) for more than a year or so. In 2009, the bottoming of the Great Recession was helped by the fact that wage growth, although paltry, nevertheless was accompanied by a decrease in gasoline prices that gave consumers (the 85% or 90% who were employed) more disposable income.

That situation reversed in the last 6 months and now poses the most direct threat to the sustainability of the recovery.  I explain why, below.


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