Recapturing Lost Purchasing Power?

I don’t have an opinion (either way) on Greg Ip, the WSJ reporter who covers the Fed.

But I have to call this sentence into question:

"Cautious employers put the brakes on hiring in October, producing the second straight month of weak job gains. But workers recaptured some of their lost purchasing power as wages rose at the fastest pace in two years."

I have to take issue with that description; As we have noted repeatedly, REAL Wages and Salaries — i.e., adjusted for inflation — were a negative -2.3% in the third quarter.

Yes, salaries went up on Q3 — but not nearly as fast as prices went up. In other words,  workers LOST additional purchasing power. They didn’t recapture anything.

Anytime the phrase "Purchasing Power" is used, it is referring to REAL wages. I have also seen it used to reference after tax wages (inflation adjusted or not) — but since there wasn’t any change in Tax policy in Q3, this definition is irrelevant to the present discussion.


Any thoughts on this? Am I missing something here?

Hiring Was Cautious in October
Job Gains Were Weak,But Workers’ Wages Rose At Fastest Pace in 2 Years
THE WALL STREET JOURNAL, November 5, 2005; Page A3

Category: Economy, Inflation

Connect the Dots

Category: Economy

Week’s Weirdest Story: Fidelity dwarf in demand

Category: Financial Press

NFP: Ignore the noise

Category: Economy

NFP Payroll: Special Hurricane Accounting Edition

Category: Economy

New Column Up at TheStreet: Restrained Rally Slowly Emerging

Category: Trading

Greenspan: Yield Curve ‘No Longer Useful’ Gauge Of Economy

Category: Economy, Fixed Income/Interest Rates

Attack of the Blogs Informed Citizens

Category: Financial Press, Web/Tech, Weblogs

How to Avoid Being BlogBashed:

Category: Weblogs

New Column up at Real Money (11/2/05): Restrained Rally Slowly Emerging

Category: Investing, Trading