US Consumer Spending Expected to Fall as Wages Decline

August recorded the fifth straight month of wage declines as more Americans face declining take-home pay totals. In 2010, median household incomes fell to $49,445 – the lowest level in more than ten years. The poverty rate currently sits at a 17-year high 15.1 percent.

“Those who are employed are worried about their income and are seeing real purchasing power get squeezed, therefore they’re set to retrench a bit,” said Julia Coronado, chief economist for North America at BNP Paribas in New York, who has served on the Fed board’s forecasting team. “That’s the danger right now. It means the recovery remains very fragile.”

Source: Bloomberg

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