Friday’s jobs report was awful, but contrary to popular belief does not signal the death of the consumer. This notion–that fewer people working means less consumption–has become conventional wisdom. And those who believe this think government “stimulus” is the only way to prevent an economic bloodbath. It’s easy to get dour in the current economic environment. Along with the sharp decline in jobs during December, total hours worked plummeted 1.1%, in large part due to a sudden spike upward in the number of workers who want to work full-time but who can only find part-time jobs. Except for an unusual East Coast blizzard in 1996, this was the biggest drop in total hours worked since 1982. And since December saw some of the worst snowstorms to hit the U.S. in decades, it is possible the weather again played a role.
Despite this, hourly wages rose 0.3% in December and were up 3.7% from December 2007. With the Consumer Price Index (CPI) expected to decline by 1.2% in December (data released this Friday), real (or, inflation-adjusted) wages likely increased 1.5%. Moreover, those real wages are likely up 4.8% from a year-ago, the fastest increase since 1972. Continue reading . . .
