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Real Wages Decline

Summary:
Trump and his allies have been loudly bragging about the second quarterly GDP growth rate of 4.1%.  It is quite possible that a growth rate of this sort may be maintained for another quarter or so, given the large fiscal stimulus put in place at the beginning of the year. How curious it is that that coincided with the peak of the US stock market, at least as measured by the Dow.However, this is seriously overblown for the simplest of reasons: the rate of inflation is rising.  It has now gotten to rising at a 2.9% rate while nominal wages are rising at a 2.8%.  So real wages have declined by a 0.1% rate.  Real wages rose throughout nearly all of the Obama presidency, except for a couple of quarters.  But if one pays attention to Trump and his allies, one would have no idea of this

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Trump and his allies have been loudly bragging about the second quarterly GDP growth rate of 4.1%.  It is quite possible that a growth rate of this sort may be maintained for another quarter or so, given the large fiscal stimulus put in place at the beginning of the year. How curious it is that that coincided with the peak of the US stock market, at least as measured by the Dow.

However, this is seriously overblown for the simplest of reasons: the rate of inflation is rising.  It has now gotten to rising at a 2.9% rate while nominal wages are rising at a 2.8%.  So real wages have declined by a 0.1% rate.  Real wages rose throughout nearly all of the Obama presidency, except for a couple of quarters.  But if one pays attention to Trump and his allies, one would have no idea of this development. Needless to say, as the price increases from the trade war kick in, this situation is  not likely to improve.

Barkley Rosser

Barkley Rosser
I remember how loud it was. I was a young Economics undergraduate, and most professors didn’t really slam points home the way Dr. Rosser did. He would bang on the table and throw things around the classroom. Not for the faint of heart, but he definitely kept my attention and made me smile. It is hard to not smile around J. Barkley Rosser, especially when he gets going on economic theory. The passion comes through and encourages you to come along with it in a truly contagious way. After meeting him, it is as if you can just tell that anybody who knows that much and has that much to say deserves your attention.

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