Prices Soar As Wages Stagnate: Federal Reserve’s Damage Continues

The price of meat has not spiked this high in one month since November, 2003, according to Zero Hedge. It rose almost three percent in April.

According to our leaders, this is good news.

USA Today reported,

Wholesale prices rose sharply last month, driven up partly by higher prices for meat and other foods.

The producer price index, which measures changes in the prices of goods and services that companies buy, increased 0.6% in April, the Labor Department said Wednesday.

Although inflation remains low, wholesale prices last month were up 2.1% on an annual basis. That’s the biggest 12-month increase in more than two years and close to the Federal Reserve’s 2% annual inflation rate target.

Inflation is back and this can only mean one thing. Slack in the economy is evaporating more quickly now as the economy gets closer to full employment,” said economist Chris Rupkey, of Bank of Tokyo-Mitsubishi in an email to clients. “Bet on it. Inflation isn’t dead. We found some in today’s PPI report.”

Because we aren’t able to afford as much meat, that must mean we are approaching full employment.

Suuure we are. Then there is this from Bloomberg:

The cost of living rose in April and fewer Americans filed claims for jobless benefits last week, showing the world’s largest economy is making progress toward the Federal Reserve’s unemployment and inflation goals.

The consumer-price index increased 0.3 percent last month, the biggest gain since June, Labor Department data showed today in Washington. The number of applications for unemployment insurance payments dropped by 24,000 to 297,000 in the week ended May 10, less than any economist projected in a Bloomberg survey and the least since May 2007, according to other figures.

Improving consumer spending is giving companies such as Chipotle Mexican Grill Inc. the confidence to charge customers more, helping inflation inch up toward the Fed’s target. The drop in firings will need to be accompanied by sustained gains in hiring and wages that will help consumers cope with any additional price increases.

That is how the media reports to you that your real wages have dropped as if it were a sign of better things to come.

In your world, it is good news when prices drop. This is what used to happen all the time in the United States in the 1800s up through the early 1900s. As productivity increased goods became less expensive. We still experience that world in the tech industry, with smart phones and tablets.  But everywhere else we always find our money gets us less. As the Bureau of Labor Statistics points out,

Real average hourly earnings for all employees decreased 0.3 percent from March to April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decrease stems from unchanged average hourly earnings combined with a 0.3 percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings fell 0.3 percent over the month due to the 0.3 percent decrease in real average hourly earnings combined with an unchanged average workweek.

Real average hourly earnings fell 0.1 percent, seasonally adjusted, from April 2013 to April 2014. The decrease in real average hourly earnings, combined with a 0.3 percent increase in the average workweek, resulted in a 0.2 percent increase in real average weekly earnings over this period.

So we all got poorer in April—and the media reports this as if you should be glad that the Federal Reserve is doing such a great job for us.