Consumers are squeezed as inflation outpaces wages

Consumers are squeezed as inflation outpaces wages

WASHINGTON – American families were squeezed last year as their inflation-adjusted weekly wages fell 1.6 percent — the sharpest drop since 1990 — even as consumer prices rose only modestly. Their spending power sank in the face of falling wages, job losses and higher prices for energy, medical care and education. Slack pay and scarce job creation are slowing consumer spending, hindering the economy's ability to mount a strong recovery. Overall consumer prices rose 2.7 percent last year, the Labor Department's Consumer Price Index showed Friday. A surge in energy prices last year offset the biggest drop in food costs in nearly a half century. Core inflation, which excludes the volatile food and energy categories, rose 1.8 percent for the 12 months ending in December. It matched the 1.8 percent rise in core inflation in 2008. Both gains were the smallest since a 1.1 percent rise in 2003. For December, the CPI rose a modest 0.1 percent. Excluding food and energy, prices were also up just 0.1 percent last month. Also Friday, the Federal Reserve said industrial production rose 0.6 percent in December as unusually cold weather helped energy utilities offset a small drop in manufacturing. It was the sixth straight monthly gain in production. But the mixed picture shows the economic recovery remains tepid, as consumers and businesses spent too little to spur the production of more factory goods. The 2.7 percent rise in overall consumer prices for 2009 followed a 0.1 percent increase in 2008, which had been the smallest gain in more than a half century.

news.yahoo.com...

Uh oh.

Despite some people on ATS saying that inflation isn't a worry...this states otherwise. I can vouch for this myself as prices are going up..yet I've received no pay raise in 2 years as my company has frozen all pay.

Let's hope it doesn't get worse.

I know alot of people suffering from the same type of thing.

I myself, get a 50 cent raise each year. That hardly covers sky-rocketing prices.

But Ive noticed that while food is more expensive, rental properties have gone down. At least here in Savannah.

Great post!

Why does the government say that inflation is negative and prices are dropping? I read this article and this makes more sense that what the government comes up with.
The problem with the government they are looking at inflation from a theoritical stand point; much like a scientist observing data from the swine flu but never experiencing it. The government does not see it because it does not effect them. They do some random mathmatical caculation that takes nothing like what is in the article to account.
If I were from a different planet and come to the USA I would be deeply confused how we every managed to make it this far.

Has anyone else notice the invisble inflation that's occurring in the groceries? I've noticed that cans and boxes are holding less now: what used to be a 16 oz can is now 15, 12 is 11 or 11.5, but the price is the same or slightly higher.

This isn't counted as inflation, but it is.

Originally posted by InertiaZero
I know alot of people suffering from the same type of thing.

I myself, get a 50 cent raise each year. That hardly covers sky-rocketing prices.

But Ive noticed that while food is more expensive, rental properties have gone down. At least here in Savannah.

Great post!

I have noticed rental properties have specials but that has been done for years. The market rate for apartments have actually gone up. Do you know if those were specials or the market rate? I would pay attention to the market rate than the specials because once a person's lease is up it usually goes to market rate which can be anywhere from $20_$200 more than the specail. I know I got in on a special and the market rate for my apartment has gone up to $700/month. When I first signed my lease the market rate for my unit was $650.

This is new? For many middle and low income Americans, inflation has outpaced wage increases for a very long time. I would say for decades.

reply to post by dreamseeker


Market rate, in my area has taken a dive. Places that would have been 1200 a month two years ago, are now 900. And such.

Apartment complexes have taken the same dive, but I know what you are talking about. The "Free rent til october!!" Specials. Or the "300 rebate" that you can take all in one month, spread out monthly.

Most likely its a good time to start stocking up on canned goods etc... i see things only growing worse in time before everything falls

You know I posted something about how captilism does not work and we are all slaves to the rich etc. I posted this on craigs list and I was called a socialist and basically cursed out. I don't think the average person really sees, cares or even wants to hear the real truth.
The average american citzen is content as long as they have their TV and internet. Apathy is a new trait of this new age. Whatever happened to the spirit of revlution and change?