U.S. Real Wages
This speaks directly to the ability of prices being able to "stick" in this environment (i.e. they won't) if wages do not keep pace. See:
-- Inflation V Deflation – Which Door Do You Pick? - List of both inflationary and deflationary pressures currently at work.
-- Inflation/Stagflation/'Flopflation' - Conditions under which prices are 'sticky' - Why I think calling what we have now 'stagflation' is misleading and will lead to the wrong conclusions. The US private sector is in a balance sheet recession. So the commodity price spikes (checklist's 'flopflation') will not stick because wages will not grow to accept them (hence commodity crashes after the spikes). ⇒ CPI is likely to be very low for the next 5-10 years. ⇒ Nominal Prices and real prices will be approximately the same for the next 5-10 years.
Chart of the Day: U.S. Real Wages
from Credit Writedowns by Edward Harrison
This chart was put together by David Rosenberg of Gluskin Sheff. It shows that wage growth in the U.S. is not keeping pace with inflation. For the statistical recovery to continue sustainably, we will need to either see this trend reversed. Alternatively we could see an increase in aggregate debt levels or a disproportionate increase in consumption from higher net-worth consumers as a bridge to longer-term growth. But without eventual real wage growth for the middle class, this is a bridge to nowhere.