Don't Count on a Raise Anytime Soon

These days, it seems like all of us are checking our bank accounts, fretting over our investments, wondering about the resell value of our house, and thinking that this may be the year to finally curtail our holiday spending. Even for those who have "recession-proof" jobs, whatever those may be, a serious sense of anxiety is permeating homes across the country.

The economic downturn follows several years of declining or stagnating wages and incomes. The scenario is simple -- for the first time on record, incomes have fallen during an economic expansion. Last year's median income of $50,200 is actually less than the $50,600 that the same household earned in 2000. So while GDP and productivity have gone up since W took office, incomes and wages have not kept pace. Although U.S. Sen. John McCain may say the "fundamentals of the economy are strong," they aren't really, my friends, at least in the sense measured by everyday Americans like you and me.

So this recession hits us when we're already hurting. It's not as if we were living the highlife and boom! recession comes and so we cancel the Caribbean cruise this year. No -- prior to this year, so many Americans were already slipping down the precipice. The recession accelerates this slide. And this is what makes this recession different from the others, so says David Leonhardt in today's New York Times:

What will make this recession different, not matter how deep or shallow it is, is that it's following an expansion in which most families received little or no raise.

In a recession, businesses reduce their workers' hours, give raises below the rate of inflation, and withhold bonuses. As a result, wages and income will be the biggest losers in the recession. Leonhardt says that the effects of this pay slump are going to be significant. Households will contine to pare back spending and loans will go unpaid. Leonhardt thinks that the decline in consumer spending will hit our economy the hardest, suppressing GDP growth:

For two decades, consumer spending has been an enormous driver of economic grwoth, thanks in good measure to a long bull market, a housing bubble and a boom in consumer debt. The bull market, the housing bubble and the debt boom have all ended - and now paychecks are shrinking, too.

Also in the New York Times today is a substantive article by Jackie Calmes on the the candidates' economic plans. This sort of coverage is appreciated. In this past Sunday's Times, public editor Clark Hoyt commented on the Times' coverage of style over substance when it comes to the campaigns. Hoyt's piece suggested that readers are looking for more hard information on the candidates' governing plans, especially in these final weeks. This just might explain why McCain's negative attacks against U.S. Sen. Barack Obama aren't working and why his poll ratings are dropping.