Real Earnings Decline in June 2009

The latest reading on earnings released by the Bureau of Labor Statistics (BLS) does not bode well for a strong recovery in the U.S.  In addition to the onslaught of job losses, those still working are finding their paychecks lighter.  That combined with continued inflation, though tame by most standards, means that the consumer, still struggling with debt, will be in no mood to shop heavily.  Investors keen on consumer stocks should generally avoid companies that rely on discretionary income and head toward the “trade down” value stocks like McDonald’s, Walmart, Kroger and Family Dollar (like always though, do the homework before buying).

Here is the press release from the BLS:

REAL EARNINGS IN JUNE 2009

Real average weekly earnings fell by 1.2 percent from May to June after
seasonal adjustment, according to preliminary data released by the Bureau of
Labor Statistics of the U.S. Department of Labor. This decrease stemmed from a 0.3
percent decrease in average weekly hours and a 0.9 increase in the Consumer Price
Index for Urban Wage Earners and Clerical Workers (CPI-W). Average hourly earnings
were unchanged.

Data on average weekly earnings are collected from the payroll reports of
private nonfarm establishments. Earnings of both full-time and part-time workers
holding production or nonsupervisory jobs are included. Real average weekly
earnings are calculated by adjusting earnings in current dollars for changes in the
CPI-W.

Average weekly earnings rose by 0.9 percent, seasonally adjusted, from June
2008 to June 2009. After deflation by the CPI-W, average weekly earnings increased
by 2.6 percent. Before adjustment for seasonal change and inflation, average
weekly earnings were $609.37 in June 2009, compared with $613.80 a year earlier.