This article originally appeared on the Washington Post on August 19, 2019.
In a recent online essay for Medium titled “The Coming Economic Crash — And How to Stop It,” Democratic presidential hopeful Sen. Elizabeth Warren (Mass.) warns of an imminent “economic downturn.” As one warning sign, Warren says Americans are saddled with excessive household debt due to a “generation of stagnant wages and rising costs.” Her argument is so 2016.
As talk of a looming recession has picked up steam this month, and as Warren’s poll numbers have jumped, it’s worth taking a closer look at her message about wages and costs.
The Bureau of Economic Analysis on July 30 published its annual revisions to personal income data. Following meager growth in employee compensation of 2.7 percent in 2016 and 2.9 percent in 2015, the revisions show significant increases of 4.5 percent in 2017 and 5 percent in 2018. To put those numbers in context, in President Trump’s first two years, employee compensation increased by $672 billion more than it did during President Barack Obama’s last two, for a whopping 42 percent improvement. In June, wages and salaries grew at an annual rate of 5.4 percent, with inflation at 1.4 percent, well below the Federal Reserve’s 2 percent target.
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