They're calling for 8 inches

The economy is in "good shape," Treasury Secretary John Snow said yesterday. He was pleased with the modest 0.1 percent increase in the Consumer Price Index for last month, and satisfied that the core inflation rate of 0.2 percent is low. He's concerned about the deficit, but thinks it can be watched by constraining spending.

He says that 2004 was a real turning point for the economy, that we've had good GDP growth (especially factoring in the Microsoft dividend payout), and the figures show a 4.4 GDP increase for all of 2004, which was way ahead of forecasts, making it the best year since 1999.

Snow didn't go into any details on the deficit, or on interest rates. Nor did he have anything to say about the real earnings of the average worker. It would be hard to imagine the 2004 tax cuts not fueling economic growth. But Snow made no reference to that yesterday. We know the plan is to make the tax cuts permanent, but with a 450+ billion dollar deficit projected for this year, that can only mean inflation and higher interest rates.

The continued rise in the price of oil will not help the ballooning trade deficit, the rise in energy costs conspiring to drive more jobs overseas, and the explosion in medical costs.

Good shape?

Yesterday's Department of Labor report on real earnings in January 2005 showed that Real average weekly earnings fell by 0.2 percent from December 2004 to January 2005 after seasonal adjustment, according to preliminary data released today by the Bureau of Labor Statistics of the U.S. Department of Labor. A 0.2 percent increase in average hourly earnings was more than offset by a 0.3 percent decline in average weekly hours and a 0.1 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)."

In case you were wondering where that leaves you, it means it's getting harder to keep up with the rising cost of living, and your wage increase isn't going to cover it.

Average weekly earnings rose by 2.3 percent, seasonally adjusted, from January 2004 to January 2005. After deflation by the CPI-W, average weekly earnings decreased by 0.7 percent.

It's snowing in Philadelphia as I write this at 1:15 PM EST on 02/24/2005. It hasn't hit New York yet.

I'm going outside to catch a smoke. There will doubtlessly be MORE TO COME on this topic. Stay tuned.