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America's lost decade

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Andy Nelson / The Christian Science Monitor

(Read caption) In 1998, President Clinton was in office, no one had thought of the iPod, and the World Wide Web was a brand new concept for most Americans. It seem so long ago, but in the decade between 1998 and 2008, the average American income fell rather than increased.

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I was looking at the new earnings data released by the BLS this morning, which shows real average income for all workers declining 0.6 percent year over year. Realistically speaking, this means that earnings are flat for people with jobs. People without jobs, who aren’t included in the survey, are likely much worse off in general.

We might also keep in mind that when making year over year comparisons, that March 2009 was just a few months after the panic of 2008, so to have had so little improvement compared to the early months of 2009 is a grim commentary indeed.

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Also, when thinking about household debt, unemployment, and continued increases in the price of gasoline (which rose 15 percent over the last 6 months), household budgets in America are in extremely dire straits.

If this were only a short term phenomenon, it would be one matter, but when looking at what has happened over the past decade, the continued malaise is really just more of the same in spite of the fact that it was masked by a brief bubble in the middle of the decade.

For example, American median household income in 1998 (adjusted for inflation) was $51,295. Ten years later, in 2008, it was $50,303. Over the same period, household debt increased 139 percent.

Now come the years of de-leveraging with stagnant incomes, which will be painful.

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