Thursday, July 16, 2015

IT'S THE STAGNANT WAGES, STUPID!


The reason the economy has been sluggish is no surprise. This meme from the Federal Reserve of Cleveland helps make the point that it's stagnant wages that's stifling growth in the economy.
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Because it needs to be repeated, I want to emphasize the comments of economist Joel Elvery, who works at the Cleveland branch of the Federal Reserve. When asked why wage growth - or the lack thereof - matters, Elvery pointed out that personal consumption accounts for roughly 70 percent of the country's Gross Domestic Product (GDP). 

Elvery added:

When wages are flat, it limits the amount of expansion in personal consumption, so it stifles the growth of the economy.

Put another way, if there's enough wage growth to spur demand everyone does better. Period. 

- Mark 

Click here for the source, and a huge representation of the meme.

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