Our Revels Are Now Ended
Syllabus Part II: Economics 101b Fall 2005

Daniel Gross Writes About the Class War

The class war by the rich against the non-rich, that is:

Daniel Gross: BUSH BOOM, CONT'D From an AFP story on today's inflation numbers, which showed the Consumer Price Index has risen 4.7 percent in the past 12 months, and 1.2 percent in September alone.

Dick Green at Briefing.com said he viewed the report as positive.

"Gasoline prices at the pump have declined since this survey, and global oil prices continue lower," he said. As energy prices in CPI flatten (or even drop) the next several months, the total index could post some very low numbers."

"It is amazing how much pessimism persists amidst such good news," Green added.

Well, one reason people could be pessimistic is that inflation is rising (which means things cost more) and wages are falling (which means people have less money to buy all that stuff that costs more.)

From the same article:

"Wage pressures were tame. In a separate report, the Labor Department said average weekly earnings fell 1.2 percent after adjusting for inflation. Real average hourly earnings are down 2.4 percent in the past year, while real average weekly earnings are down 2.7 percent, the biggest drop in 14 years."

At least that dreaded inflation in workers is under control.

Falling real wages are not a sign of an economy near full employment, but one that still has enormous amounts of slack in the labor market.