You know, consumption expenditures, the category that accounts for 70 percent of GDP in the United States. The reason that WSJ readers may wonder if the paper has heard of consumption is that an article comparing wage growth in the euro zone and the United States never mentions it.
The article argues that the euro zone countries have greater fear of a wage-price spiral than the United States, because its workers have been better able to keep up with inflation due to its more powerful unions. While this is undoubtedly true, the fact that wages in the United States are not keeping pace with inflation is likely to depress consumption.
The savings rate was already close to zero, meaning that workers on average were spending their whole income. If their real income falls, then they will be forced to consume less, especially in a context where many no longer have equity in their homes against which they can borrow. This will reduce demand in the economy and worsen the downturn.
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