Skip to content

The economic problem that could destroy America TODAY

Free World Class Education
FREE Catholic Classes
Stagnant wages are a threat to our economic future.

The economy is growing slowly, and the bad news comes at a time when the Federal Reserve is contemplating an interest rate hike. The combination of a sluggish economy and rising interest rates could lead to a recession.

Stagnant wages are a threat to our already weak economy. Fortunately, there's a positive trend as some employers begin hiking wages.

Stagnant wages are a threat to our already weak economy. Fortunately, there's a positive trend as some employers begin hiking wages.

LOS ANGELES, CA (California Network) - The U.S. economy grew slowly this spring. According to the Commerce Department's measurement, growth was a sluggish 1.1 percent. This announcement comes at a time when the Federal Reserve is signaling its willingness to raise interest rates.

There is encouraging news. Consumer spending continues to rise as employers are starting to raise employee wages. Higher wages can trigger growth as more money means more spending.

In 2015, the economy grew at a respectable 2.6 percent last year. Wall Street continues to do very well, flirting with record highs.

Economists expect the economy will grow at a 2.5 percent pace, which is a good figure for modest growth. Such growth would justify a rate increase by the Federal Reserve. The Fed will raise interest rates when growth accelerates. Higher interest rates discourage inflation by keeping the economy from growing too fast. However, when the economy shrinks, or grows very slowly, the Fed will cut interest rates which encourages spending and a return to growth.

If the Fed makes the wrong move and raises rates during a time of contraction, or lowers rates during expansion, they will make the trend worse. Such mistakes can turn a recession into a depression, as happened in the Great Depression. Or, they can turn inflation into hyperinflation which makes money worthless.

At present, it seems the greatest problem facing America are the low wages paid to workers. Both the poor and middle class have suffered from stagnant wages and have not seen their purchasing power rise since 2001. In fact, increases in prices have outstripped increases in wages, causing both groups to lose purchasing power. Many consumers have attempted to cover these developing gaps in purchasing power with credit, leading to a glut of debt.

Either wages will need to rise to help workers cover the debt, or the debt could go bad, resulting in default. Defaults on debt can spark sudden collapses in the economy, as happened in the Great Recession of 2008. Some economists have warned of a repeat of 2008 on a deeper scale.

A final problem is the fact that small employers, often squeezed by larger competitors, such as WalMart in the retail sector, cannot afford to raise wages much. Large employers can easily do so, but small enterprises are struggling as much as middle class consumers.

The financial waters ahead are tricky, and a wrong move by the government or the Federal Reserve could turn potential growth into economic collapse.


The California Network is the Next Wave in delivery of information and entertainment on pop culture, social trends, lifestyle, entertainment, news, politics and economics. We are hyper-focused on one audience, YOU, the connected generation. JOIN US AS WE REDEFINE AND REVOLUTIONIZE THE EVER-CHANGING MEDIA LANDSCAPE.


More Business & Economics

Making a Difference: Catholic social teaching's message to the national budget

Image of All people have a right to participate in the economic life of society.

Thirty plus years ago, the U.S. Catholic bishops wrote a very challenging pastoral letter titled "Economic Justice for All." In their ... continue reading

Recession looms, what should we do? Watch

Image of Knowing a recession is coming will allow us to prepare.

For the past 60 years, the Federal Reserve's yield curve has predicted recessions. Now, as the yield curve shows signs of inverting again, ... continue reading

Disaster looming? Market flashes warning, worst April since Great Depression Watch

Image of The stock market is in decline. Is recession looming?

Markets have suffered their worst April start since the Great Depression, led by Amazon which lost 5.21 percent of its value in one day ... continue reading

Stock market tumbles, is a recession on the way? Watch

Image of The stock market took a tumble yesterday but may recover today. Nobody is certain of what's next.

Global markets have dropped for the past few days, and just this morning have rebounded. It remains to be seen if the recovery is ... continue reading

Is free money a Christian solution to economic problems? Watch

Image of Is there a Christian solution to our economic problems?

The world is richer and more productive than ever before in history. Yet, income inequality is growing the poverty is on the rise. Middle ... continue reading

Never Miss any Updates!

Stay up to date with the latest news, information, and special offers.

Deacon Keith Fournier Hi readers, it seems you use Catholic Online a lot; that's great! It's a little awkward to ask, but we need your help. If you have already donated, we sincerely thank you. We're not salespeople, but we depend on donations averaging $14.76 and fewer than 1% of readers give. If you donate just $5.00, the price of your coffee, Catholic Online School could keep thriving. Thank you. Help Now >

Learn about Catholic world

Catholic Online
Inform - Inspire - Ignite

Catholic Online Saints
Your saints explained

Catholic Online Prayers
Prayers for every need

Catholic Online Bible
Complete bible online

Catholic Online News
Your news Catholic eye

Daily Reading
Today's bible reading

Lent / Easter
Death & resurrection of Jesus

Advent / Christmas
Birth of Jesus

Rest of Catholic Online
All Catholic world we offer

Products and services we offer

Catholic Online Shopping
Catholic medals, gifts & books

Advertise on Catholic Online
Your ads on

Catholic Online Email
Email with Catholic feel

Learn the Catholic way

Catholic Online School
Free Catholic education for all

Student Classes
K-12 & Adult Education Classes

Support Free Education
Tax deductible support Free education

Connect with us online

Catholic Online on Facebook
Catholic social network

Catholic Online on Twitter
Catholic Tweets

Catholic Online on YouTube
Enjoy our videos

Catholic Online on Instagram
Shared Catholic moments

Catholic Online on Pinterest
Catholic ideas style inspiration

Catholic Online Logo

Copyright 2019 Catholic Online. All materials contained on this site, whether written, audible or visual are the exclusive property of Catholic Online and are protected under U.S. and International copyright laws, © Copyright 2019 Catholic Online. Any unauthorized use, without prior written consent of Catholic Online is strictly forbidden and prohibited.

Catholic Online is a Project of Your Catholic Voice Foundation, a Not-for-Profit Corporation. Your Catholic Voice Foundation has been granted a recognition of tax exemption under Section 501(c)(3) of the Internal Revenue Code. Federal Tax Identification Number: 81-0596847. Your gift is tax-deductible as allowed by law.