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Have U.S. wages stagnated? Probably not.
And even if they had, it would not matter. Prices have been declining so rapidly that this alone has boosted real wages substantially. More if you click through!
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Food prices falling faster than official figures show
And prices are falling, we are in a deflationary epoch. More after the jump! This Is Where America's Runaway Inflation Is Hiding
. . . an event which deeply hurts the poor, and lower middle class. Don't worry, our local governments are not going to change course just to help keep our poor out of the poor house, No siree! Our local governments will stick to their destructive zoning, growth, and services boundary laws regardless of the consequences for the poor, the lower class, and even the middle class. Just take a look at San Francisco where you will see anyone earning less than $200,000 is pretty much boxed out of the home ownership racket. Rental inflation is driven by a lack of developable land proximate to where people would like to live. This is commonly a false problem driven primarily by zoning and land use laws. Boomer versus Millennial Wrestling World Smackdown, Portland is out ahead, but Seattle is running a close second! Increasingly most of our economic problems are driven by economically incompetent government policies. Perhaps it is time for a change? U.S. Economy Expands to 0.5% Pace, Weakest in Two Years
. . . no matter what the economy bulls say, it's no boom, and closer to recession than they want to admit. "The U.S. economy expanded in the first quarter at the slowest pace in two years as American consumers reined in spending and companies tightened their belts in response to weak global financial conditions and a plunge in oil prices. Gross domestic product rose at a 0.5 percent annualized rate after a 1.4 percent fourth-quarter advance, Commerce Department data showed Thursday. The increase was less than the 0.7 percent median projection in a Bloomberg survey and marked the third straight disappointing start to a year." That 4th quarter 1.4% "boom" was driven by subprime auto loans, and another housing flight. While you might not want to reprise the Great Recession, the federal government does, and is trying its best to get us there. Thanks, Bammy! "Spending, while slightly better than the 1.7 percent median forecast, was a disappointment in light of the consumer-friendly fundamentals including low gasoline prices, cheap borrowing costs, increased hiring and warmer-than-usual winter weather. “The first quarter is going to be the worst quarter for consumption for all of 2016,” said Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York. “With financial markets calming down and retracing all of their losses, the fundamental factors that have driven consumption will continue to do so.'" This is more prayer than reality. The wankers have been wrong for the past, well, forever. The chances they are getting it right now are minimal. But perhaps Oubina is correct, or we are diving into a new recession. I still can go either way on this. The GDPNow is banging about at 0.6%, so there is confirmation. GDPNow Forecast Rises to 0.6% as Trade Deficit Narrows | MishTalk It looks like consumer demand is tanking. "Subtracting from GDP vs Last Quarter Nonresidential fixed investment Private inventory investment Exports Federal government spending Imports Adding to GDP Personal consumption expenditures (PCE) Residential fixed investment State and local government spending PCE (consumer spending) added to GDP but is decelerating. Economists’ Estimate 0.7% The Bloomberg Economy consensus estimate was 0.7% in a range of 0.1% to 1.1%." I am sorry but the Economic consensus has been wrong on the high side for a while now. We are faced with a decelerating economy, especially consumers. The auto situation has collapsed, and we are left with housing being the only thing between a flat dead economy at zero growth, and recession. I get the feeling we are slowly backing into a new recession after 7-1/2 exhausting years of fighting against the Obama Administration's attempts to regulate businesses out of existence. Cross you fingers, and hope the dithering dunce from Chicago is too distracted by the good weather, and the golf game to muck about in the economy, or do more damage to business. Otherwise we are probably in for a European Sucking Recession. And that would be bad indeed. Dead Wrong with Johan Norberg - Stagnant Middle Class
Johan Norberg makes excellent points that first when benefits are included, real wages have risen, and second it is not the wage, but how much the wage can purchase that matters. I have written about this often. The wage stagnation issue is a canard which is designed to throw readers off the correct trail. American's are far wealthier today than we were in the 1970s. Much of this has come from the continuous decline in prices since then. It is also due to the decline in energy, and food as a components of daily living. The decline in the price of food has been dramatic, from about 25% of average daily budget at about the turn of the 20th century, to about 6% of the average daily budget today. Essentially, while wages rose only a little, prices collapsed, quality improved, and energy costs plummeted (both the actual cost of energy, and the amount of energy necessary to operate an appliance. This year we will hear much about wage stagnation, ignore these complaints, they are voiced by either duplicitous agitators, or the uninformed. High school student invents a cheaper hearing aid
. . . and we allow millions to fail. How many could have discovered other fantastic innovations like this? "When Mukund Venkatakrishnan was 14, he visited India and was tasked with helping his grandfather get tested and fitted for a hearing aid. He saw what a costly and difficult process it was and resolved to find an alternative. "Since audiologists are specialists, even finding and getting an appointment with one in India was really hard," said Venkatakrishnan, who is now 16. "And then we got ripped off." Venkatakrishnan said they spent about $400 or $500 on doctor's appointments and about $1,900 on the hearing aid itself. He realized that hearing is a luxury many people in developing countries can't afford. "In India, the median household income is $616 a year," Venkatakrishnan said. "If someone in India saves all year without spending a penny, they still can't afford a hearing aid." Venkatakrishnan's device is unique because it not only tests a person's hearing with a series of beeps, but it also programs itself to become a hearing aid. It only costs about $50 to make and can be used with even the cheapest set of headphones. Unlike with traditional hearing aids, if the ear piece gets damaged it isn't costly to replace -- you just buy another set of ear buds. In its current form, the device is about two inches and looks like a computer processor. Venkatakrishnan is planning to bring it down to about one inch and encase the operating system. He envisions the device, which has a standard headphone port, fitting into someone's pocket." Between these low cost free standing devices, and the use of smart phones as computing engine to perform the same kind of function, the world is facing serious deflationary winds for a very long time, and improved standards of living. It is criminal to allow any child to fail in school, and miss his or her opportunity to completely change the world for the better. Autonomous Truck Update: Successful Autobahn Test of Platooned “Connect-Equipped” Mercedes Trucks | MishTalk
. . . 3, 2, 1 . . . Good article, and note that while the trucks have drivers today, they will not in the near future. Another change which will limit auto and truck interactions, is the long haul trucks will increasingly travel at night and only travel during daytime where there is low chance of auto truck interaction. This will allow truck platoons to be larger, and to be more efficient. We are facing a 10% reduction in fuel costs, and the loss of a significant number of human drivers will also drive down costs. This will have a significant deflationary effect on the economy, and lower demand for oil. The self drive revolution will happen, there is nothing that can be done to stop it. Even the federal government attempting to regulate the revolution will be thwarted. Economic policymakers are at sea on inflation
Here, let me fix that for you, "Economic policymakers are adrift on a sea of stupid." Better! "Imagine that in a brief period, inflation expectations around the industrial world, as inferred from the indexed bond market or the inflation swaps market, rose by nearly 50 basis points to a level well above the 2 percent target, with larger increases foreseen at longer horizons. Imagine that at the same time, survey measures of inflation expectations such as those calculated by the University of Michigan and New York Fed in the United States were rising sharply. Imagine also that commodity prices were soaring and that the dollar experienced a once-every-15-years decline. Imagine that the market anticipated future monetary policy in the United States that was far tighter than the Fed’s own policy projections. Imagine that measures of gross domestic product growth were accelerating, with increasing signs of a worldwide boom. Imagine also that no serious efforts were underway to reduce budget deficits. Finally, suppose that policymakers were comfortable with current policy settings based on the argument that Phillips curve models predicted that inflation would revert over time to target due to the supposed relationship between unemployment and price increases. I think it is fair to assert that in this hypothetical circumstance, there would be pervasive concern that policy was behind the curve — that much was at risk as inflation expectations were becoming unanchored and that a substantial set of policy adjustments were appropriate. The key point would be that allowing not just a temporary increase in inflation but also a shift to above target inflation expectations could be very costly. We are living in a world that is the mirror image of the hypothetical one I just described. Market measures of inflation expectations have been collapsing and, on the Fed’s preferred inflation measure, are now in the range of 1 to 1.25 percent over the next decade. Inflation expectations are even lower in Europe and Japan. Survey measures have shown sharp declines in recent months. Commodity prices are at multi-decade lows, and the dollar has only risen as rapidly as it has in the past 18 months twice during the past 40 years when the value of the dollar has fluctuated freely. The Fed’s most recent forecasts call for short-term interest rates to rise almost 2 percent in the next two years, while the market foresees an increase of only about 0.5 percent. Consensus forecasts are for U.S. GDP growth of only about 1.5 percent for the six months from October to this month. And the Fed is forecasting a return to its 2 percent inflation target on the basis of models that are not convincing to most outside observers." It's enough to give a Keynesian economist the vapors! And Larry is nothing, if not a card carrying Keynesian. The proposed solutions to all of our problems from these people is always the same, more debt, more government expenditure, more monetary pumping, and more Keynes. After decades of easy money, Keynesian policies, progressive governance, and fiscal irresponsibility, these yammerheads cannot believe their policies have failed. So, they double, or triple down. The last doubling down gave us the slowest recovery in US history. Do we really need another go at slow? It is time to take economists like Summers unseriously, for they are unserious. It is time to return to sane, rational monetary policy, responsible fiscal policies, and frugal governance. But I expect none of this, instead, I expect more foolishness. The nation is being run by a clown college of fools, elected by us. We truly get the government we richly deserve. |
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