Yuck: The Great Contraction, Part 2

Many mixed messages in the headlines about the economy. On one hand everyone's excited about the Dow getting back to 10,000.

For example today's Wall Street Journal reports that "Dow at 10,000 as Crises Ebbs". Most people take this to mean that our problems are over. In reality, after having our heart attack we've gotten out of the ICU. We still have a long way to go.

Here's one reason why as reported in the New York Times:

The Bureau of Labor Statistics does not track pay cuts, but it suggests they are reflected in the steep decline of another statistic: total weekly pay for production workers, pilots among them, representing 80 percent of the work force. That index has fallen for nine consecutive months, an unprecedented string over the 44 years the bureau has calculated weekly pay, capturing the large number of people out of work, those working fewer hours and those whose wages have been cut. The old record was a two-month decline, during the 1981-1982 recession.1

For an economy that is 70% driven by consumer spending the fact that consumers have less to spend is a big deal.

Hope is not an innovative strategy. Everything's pulling back after puffing up to their artificially inflated levels.

Notes:
1. http://www.nytimes.com/2009/10/14/business/economy/14income.html?_r=1&em