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December 09, 2005

Productivity News Good, Real Wage News Bad

Kevin Drum watches the two-class economy roll forward:

The Washington Monthly: Great economy we have going here:

Productivity rose [at a] 4.7 percent [annual rate] in the non-farm business sector of the economy from July to September.... Real hourly compensation, which adjusts wages and other benefits for inflation, fell [at a] 1.4 percent [annual rate]....

So if productivity is skyrocketing, but labor compensation is going down, where's all that extra money going? Yes, you in the back?...

And Mark Thoma watches as Greg Mankiw tries to say that it's somehow Donald Rumsfeld's fault:

Economist's View: Greg Mankiw: People are Confusing the Economy with Iraq : Here's former Bush administration economic adviser Greg Mankiw's offering an alternative... explanation of why people aren't overly excited about the economy:

Bush Begins Effort to Allay Concerns on the Economy, Bloomberg: The war in Iraq also makes it tougher for Bush to reassure Americans, said Harvard economist Greg Mankiw, chairman of Bush's Council of Economic Advisers from 2003 to 2005. "The perception that things are going badly in Iraq often makes people think that this economy is doing badly even when it's not true," he said...

Posted by DeLong at December 9, 2005 10:42 AM