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The American $52,000 Household Income

The Labor Department data which show that wages and benefits only grew .2% in the June quarter, served as a reminder of the struggle Americans have to make to simply keep pace with the cost of living. Every year, median household incomes are another reminder that this figure, now at just below $52,000, is actually worth much less than a decade ago.

Among the anxiety economists have about income stagnation is that American consumers will never be consumers again. It follows that U.S. GDP cannot grow much than 3% at best because two-thirds of GDP is driven by consumers. For these reasons, housing price increases and business prospects, which rose after the recession, can barely inch up from where they are today

Economists would have people believe that wages are part of a vicious cycle. Weak business prospects cause low wage increases (or layoffs). Low wages make it difficult for the housing market to recovery entirely. There are some signs this theory is wrong. For instance, some home markets have recovered entirely since the peak of the market.

Perhaps one of the things which will cause wage stagnation to continue is that large portions of America have not recovered. The income, unemployment, and poverty number from these places drag the national averages down. So, the overall numbers could be misleading. If they are, why isn’t the recovery stronger all across the U.S., the way it is in, say, economic powerhouse Texas. But, Texas has a richer mix of industries than the balance of the country, and many of these industries are doing just fine

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But. doing fine by region won’t masks the fact the doing fine across the nation has not produced numbers that show a good economic foundation is growing. People aren’t getting raises, which is proof enough that the near-term prospects for the country in total are poor

By Douglas A. McIntyre


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