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Stocks and Profits Are Up, But Wage Gains Weak

USA Today (05/06/13) Paul Davidson; John Waggoner

Although the U.S. economic outlook looks rosier than it has in a while, hourly wages remain virtually flat. The stagnant wages are translating to restrained consumer spending, and living standards aren’t rising. “Ultimately, for the economy to thrive we need everyone participating,” says Mark Zandi, chief economist of Moody’s Analytics.

“Don’t hold your breath,” for companies to boost wages, says John Lonski, chief economist for Moody’s Investors Service. Revenue growth has been meager, he says, up between 0.5% and 1% in the last year. Furthermore, because unemployment remains high, many companies don’t have the incentive to raise wages.