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Consumers are squeezed as inflation outpaces wages

Published 01/15/2010, Associated Press

The spending power of families is being squeezed, government data showed today, highlighting doubts about consumers’ ability to drive the economic rebound. Workers saw their inflation-adjusted weekly wages fall 1.6 percent last year — the sharpest drop since 1990 — even as consumer prices rose only modestly. Slack pay and scarce job growth, along with tight credit and a rising savings rate, are holding back spending. That’s hindering the recovery.

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