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Friday, April 5, 2013
The New York Times; Paul Krugman - DEPRESSION, NOT ENDED
THE NEW YORK TIMES
Little doubt that this depression is not over, but a debatable point is when did it actually start? Second, when did it start for the average American worker? In other words, are there actually multiple economic cycles concurrently occurring in an economy, thus the general economic cycle and numbers may be meaningless to the vast majority of citizens. Possibly? Hmm.
For instance, arguments could be made that the average American has lived under depressed economic conditions since 1982. No way! Well, this is when the "real hourly wages" got stuck at $16 (St Louis FED); close to when the overseas jobs exodus also began. A strong case thus could be made that a large segment (a.k.a. Middle Class) of American Society has been living in a depression for more than 30 years. How did we miss this? Are we fooled by aggregate GDP numbers for the overall economy?
There's more. Using the price of oil and average hourly wages in 1971, (St. Louis FED), the nominal wage rose from $4 per to $20 today; a modest 5 fold increase. Meanwhile, oil prices have surged from $2, to close to $100 a barrel; a 50 fold increase - meaning that in 1971 an hour of work earned two barrels of oil. Today, workers have to work ten hours for these two barrels. Hence, both observations arguably support that the depression is not over - but when did it start? And when did it start, for whom?
Maybe this is why folks feel they are working harder and harder - For So Much Less!
First Financial Insights
April 5 , 2013
When did it start?
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