wallstreetexaminer.com / by Alan Tonelson via RealityChek /
The big economic news this week has been the Federal Reserve’s decision not only to keep interest rates at their still super-low level, but to signal that they will stay there longer than previously indicated. This Fed dovishness has many economists and finance types indignant, since they believe that the American economy is amply strong enough to withstand more normal credit costs, and because they fear that ongoing floods of easy money will encourage the type of reckless investment that helped inflate the housing and spending bubble of the previous decade.
I agree with the bubble fears. But it’s hard to believe that anyone bullish on the U.S. economy has been looking at the data. For we got two major indications this week that American performance is still failing a key test – spurring strong enough growth to produce a healthy labor market characterized by adequately rising wages.
The first batch of evidence came on Wednesday, when the Labor Department issued its latest report on inflation-adjusted wages. Once again, they powerfully undermined the widespread view that this measure of pay is showing signs of meaningful life. The data revealed that after-inflation hourly wages for all private sector workers flat-lined month-to-month between January and February. Revisions were positive, but only microscopically so on net, with January’s monthly gain raised from 0.38 percent to 0.57 percent (the best such improvement since last January). But the December number was lowered from 0.19 percent to 0.09 percent.
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