THE

New York Times

blogs

a chart produced by Jared Bernstein, of the Economic Policy Institute, showing that real wages have declined steadily in recent months. Felix Salmon

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The chart doesn't mention the main reason for the fall: unusually high inflation. Since inflation is running at a 4% clip right now, you'd need wages to be rising at the same rate in nominal terms just to stay at zero on this chart. If food and energy prices stop rising at some point, real wages will start looking much healthier.

Inflation is normally a phenomenon associated with a booming economy. During such periods, inflation is frequently exacerbated by demands for wage increases, which firms are fairly willing to grant given strong economic conditions.

Now, however, inflation is primarily being driven by increasing raw materials prices, which squeeze corporate margins. That squeeze and a weak economy rule out significant wage increases for most workers. As such, real wages fall with inflation. This forces consumers to reduce their spending, further undermining the economy. The result is substantial pain for most households and a rather large headache for Ben Bernanke.

Matthew Yglesias notes:

[W]hat we have is the inflation uptick, and with it falling real wages for everyone who doesn't get at least a 4 percent raise this year, a problem that we hope won't be afflicting the all-important political blogging sector.

Energy and food prices have increased in the District of Columbia, where Mr Yglesias lives and works. As a carless resident of a transit-friendly city, he may be suffering less than others. But it should be pointed out that increases in grain prices have negatively impacted brewers and distillers of alcoholic beverages. Beer being a primary input in the journalist sector, Mr Yglesias should expect expect howls of discontent to soon erupt from his media colleagues.