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Flat wages and rising consumption are a bad mix. Together, they mean more debt and less savings, exactly the combination that led us off a cliff during the Bush years. Ryan Avent:

But that’s all over now, right?

Well, perhaps not. Real personal consumption expenditures grew in February, by 0.3%, following on an increase of 0.2% in January. That’s the fifth consecutive monthly increase, which seems like good news; certainly markets are taking it as a positive this morning. The problem is that incomes barely rose in February — by less than 0.1%. And they declined in January. And what happens to savings when spending rising and incomes are flat?

This, of course, encapsulates our current dilemma: in order to escape from the current recession we need more consumption. Government deficits help but aren’t enough on their own. So we need more private consumption even though the recession is constraining wages. It’s a problem. The obvious response is that rebuilding savings can wait, and that’s true. But not forever. Eventually consumption needs to flatten out and wages need to rise. But when?

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This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

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