Tuesday, November 21, 2006

A Strong Economy

Real WagesA brisk rise in American wages | csmonitor.com There has been much wailing and gnashing of teeth on the Left about how real wages haven't kept pace with inflation under President Bush. See the graph. Data comes from the Labor Department. (Funny how they weren't wailing about "falling real wages" in 1997 through 2000, or happy that it turned around in 2001.) But then the President has very little control over the economy. Vetoing spending bills is really about it - and I will grant that Bush hasn't done anything to hold down the size of government. Just the opposite in fact.

And isn't it just a coincidence that real wages started to fall after Sept. 11, 2001. (Maybe those on the Left don't remember what happened that day.)
American paychecks are rising again at a pace not seen since the 1990s.

The pay increase amounts to 4 percent on average over the past 12 months.
That is good news for everyone.
"Expect wages to maintain a decent clip at least through the first half" of 2007, says Jared Bernstein of the Economic Policy Institute, a liberal-leaning research group in Washington.

Those gains lately have been fairly broad-based across all pay levels, but they come at a time when wage growth seems to be harder to come by than in the past.
Why so hard? We live in a world of global markets including one for labor. (And an influx of millions of illegal immigrants holding wages down probably doesn't help that much either.)

Wages By Industry not adjusted for inflationIf you look at wages by industry, it is no surprise that some people are doing better than others. (Click on the graph to the left for a better view)

There are many articles that try to put a negative spin on the economy by discussing the housing market and the implied "bubble." This is one of them. Housing bubbles are a concern. It is one of the many reasons that people should not buy houses they cannot afford. If you can't afford your house with a 15-year mortgage, then you can't afford your house. Interest-only loans, etc. are mostly vehicles for banks to separate you from more of your money. Oh, it will let you buy a bigger house, but that is a crazy way to run your budget. Most people can't retire until they pay off their home loan. When will you be able to retire? (I recommend Rich Dad, Poor Dadfor your reading pleasure.)

The economy is strong, and right before the holiday shopping season that is good news.

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