Congratulations, Alan. Inflation has slowed. You and your colleagues at the Fed seem to have made a preemptive strike against rising prices.
But Alan, I've got to tell you: Jobs and wages are slowing, too. The jobs recovery barely got off the ground before it fizzled. Only 112,000 payroll jobs were created in June -- not even enough to keep up with population growth.
Yes, I know, Alan, one month's bad employment number may be a statistical fluke. But here's something that's not a fluke. Last Friday, the Bureau of Labor Statistics reported what's been happening to the wages of production workers. Now you know, Alan, this is a huge group -- everyone who's not a manager -- accounting for 80 percent of the workforce. Production workers' wages dropped in June. They dropped in May, too. To put this in concrete terms, in June, production workers took home an average weekly paycheck of $525.84. That's about $8 a week less than they were taking home last January. It's the lowest level of weekly pay since October of 2001.
Here's why you ought to be concerned, Alan. Low wages are a drag on the economy because workers are consumers. If the pay of 80 percent of American workers is dropping, you've got to wonder where the money's going to come from to buy all the stuff they're producing. They can't easily borrow more money, because they're already deep in debt. Plus, you and your colleagues at the Fed have started to raise interest rates, making borrowing more expensive. So, inevitably, consumer spending is going to slow down. And this in turn will further slow job growth and wages.
Look, Alan, I give you a lot of credit for stopping inflation in its tracks. But inflation may not be the biggest problem now. The problem could be an economy on the verge of going into a stall. Maybe, just maybe, Alan, you started to raise interest rates too soon.
