Real Wages, Aggregate Demand, and the Macroeconomic Travails of the US Economy: Diagnosis and Prognosis
This chapter argues that, while much attention has been paid to developments in the financial sector as causes of the Great Recession, the ultimate cause of the crisis was, in fact, longer term trends in the real economy. Specifically, it is argued that the tendency for real wages to grow slower than productivity since the 1970s has not only generated ever-increasing income inequality in the US, but has also led to a structural flaw in the process that creates the demand necessary for high employment and rising living standards. Although household debt accumulation postponed the “day of reckoning” associated with this structural flaw, the effect of sluggish real wage growth on the incomes of working households now has the potential to create a future of secular stagnation, not just for workers, but for the US economy as a whole.
|Date of creation:||Aug 2010|
|Date of revision:|
|Contact details of provider:|| Postal: 300 Summit Street, Hartford, CT 06106-3100|
Phone: (860) 297 - 2485
Web page: http://www.trincoll.edu/Academics/MajorsAndMinors/Economics/Pages/default.aspx
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:tri:wpaper:1005. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joshua Stillwagon)
If references are entirely missing, you can add them using this form.