William Emmons’s Reason

One of the reasons elucidated by William Emmons for economic stagnation in comparison to post war economy is stagnant incomes. He  has observed that there has been an upward trend with inflation with a disproportionate stagnant trend in incomes and as a result of this situation less wages means less savings and investments leading to decrease in productivity thus lowering the standards of living.

3 thoughts on “William Emmons’s Reason

  1. Sean MacDonald

    Yes, Emmons points out that stagnant incomes are a major reason that consumer spending has remained week since the Great Recession; however, inflation has not been a factor at all for at least the last eight years.

    1. Cathy B

      Professor McDonald in response to your statement, I’m confused. If your earning power does not keep up with inflation, it means you must make adjustments in other areas, therefore contribution to consumer spending is less. Since 2009 when the recession plateaued through today, earnings have not caught up to inflation. It cost more to live today that it did in 2007 (eight years ago when the recession started), so I am not sure why inflation is not a factor, please explain. Thank-you

    2. jresenowo Post author

      Professor McDonald,
      You are absolutely right, however we should take into consideration the fact that more income means more savings and investments hence more productivity. Even though inflation is not a factor there still exist “shoeleather cost and menu cost” that is not proportionate to stagnant income.


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