For about three years, or just before the terminal Keynesian/monetarist experiment of Abenomics was launched, Japanese wages were flatlining, happily hugging the 0% Y/Y line. But that was ok, because the country had deflation or at best 0% inflation, meaning quite often real wages, adjusted for actual purchasing power, were higher than nominal wages. Then, following Abe's triumphal return after a 4 year battle with diarrhea, when he unleashed a different kind of liquidity, one impacting the BOJ's CTRL-P function, after much cajoling, threats and outright incantations, Japan's nominal wages started to slowly rise higher, and as reported earlier following the latest battery of worse than expected news out of a recessionary Japan, nominal wages in August rose by 1.4%, down from 2.4% in July, driven by overtime wages which rose 1.8% (with base wages barely eeking out a 0.6% annual rise), however also at half the Y/Y rate seen in July.
What about real wages, or wages when factoring in the soaring prices of, well, everything such as TV sets rising in price by double digits (yes, in the country that gave the world Sony), or gas and heating prices through the roof for nearly 2 years now. Sadly, here the picture is far worse. Because while the nominal wage increase is welcome, if declining, the real wage crash is quite horrifying to some 100+ million Japanese. And accelerating, because while real wages dropped -1.7% in July, in August they flat out crashed by -2.6%.
In fact, even as the great Keynesian priests of Japan distract the world by pointing out repeatedly the modest and now declining rise in nominal wages, as testament of the "success"of Abenomics, what they want everyone to ignore is what is going on with real wages.
So, without further ado, here is the difference between Nominal and Real wages, as demonstrates best by that sinking Keynesian titanic, which has already returned to recession as confirmed by the upcoming negative GDP print, Japan.
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