[Mb-civic] Disturbing news on the economy - Thomas Oliphant - The Boston Globe

[William Swiggard]

Disturbing news on the economy

By Thomas Oliphant, Globe Columnist  |  August 21, 2005

WASHINGTON
FOR MORE than a year, hard-pressed Americans have been trying to signal 
the political establishment that something is upside-down wrong in an 
economy that is producing soaring costs and flat incomes. Given the 
blinders associated with his fervent ideology, President Bush's deaf ear 
is expected and unremarkable.

It's progressive politicians who should be paying more attention. More 
than a hundred years ago, Charles Dickens's cockeyed optimist, Wilkins 
Micawber, explained to David Copperfield that the difference between 
happiness and misery involves the positive or negative difference 
between income and expenses.

The signal coming from working Americans (and retired ones, too) has 
been precisely that. As the government confirmed once again last week, 
rising costs have outpaced stagnant wages in ten of the last 12 months. 
The only positive news was recorded last September and in June. But that 
was overwhelmed by the trend that has eroded the value of the ordinary 
paycheck. As almost always happens in such spirals, the problem involves 
wages and prices. The former are as close to stagnant as it's possible 
to get; these days, a 2 percent raise is heralded as generous and the 
employee who gets one is considered lucky.

It's the prices people pay, especially for necessities, that have 
exploded. For more than a year, the cost of gasoline and heating oil has 
been soaring. And for five years, the cost of healthcare has been 
exploding, too, even as the value of what care people can buy has been 
eroded via sharp increases in deductibles and copayments.

The United States has a gigantic economy, as well as a famously mixed 
one. For those who simply follow the numbers, it can often seem as if 
good news about living costs in some sectors (clothing, food, mortgage 
rates) neatly balances the bad news from energy and healthcare.

Last month, however, the underlying trend of paycheck erosion became 
harder to ignore when the Labor Department reported that consumer prices 
shot up by 0.5 percent in July overall, after giving effect to areas of 
the economy where costs are more nearly under control.

What is worse, the Labor Department reported that the average weekly 
earnings of people in the private sector who are not bosses fell during 
July by 0.2 percent.

If that were one month's statistical anomaly, that would be one thing, 
but it is a continuation of a trend that Americans have been feeling for 
a long time. The weekly earning data that the government collects 
involves roughly four out of every five participants in the labor force. 
Last year, for the first time in a decade since the US was emerging from 
a much different set of problems, the weekly earnings news after 
adjustment for inflation was negative.
http://www.boston.com/news/globe/editorial_opinion/oped/articles/2005/08/21/disturbing_news_on_the_economy/
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