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Jul 17 / Jonathan

Wage growth taking off? Uh, no.

Dean Baker. Again.

Big News: Arithmetic Problems at the Council of Economic Advisors

If we focus on just the last three months, nominal wages rose at a 4.5 percent annual rate over the three months April, May, and June compared with the prior three months. This is equal to the annual rate of growth of the CPI in the three months of March, April, and May compared with December, January, and February. In other words, the most recent data indicate that wages may now be just keeping even with inflation.

If wages have slightly trailed inflation over the last year and are just now roughly breaking even, how can President Bush’s chief economist say that wage growth “seems to be taking off?” Mr. Lazear either does not know arithmetic or is not being honest. The fact that he is making a claim so completely at odds with reality should have been big news.

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