The other wrinkle — a big, ugly wrinkle — is that Americans’ real incomes (“real” is econo-speak for “adjusted for inflation”) have been declining significantly for some time. Here is what that graph looks like…

After a big jump up in the immediate post-Covid recovery (not that we are quite entirely “post-Covid”) real wages have declined steeply — in fact, they are back down to where they were around the end of 2019, and trending in the wrong direction. Nominal wages (“nominal” meaning the number on the paycheck) have gone up, but they have gone up only about half as fast as prices, meaning that workers are worse off overall when you consider both wages and prices. Americans are working more but getting less in return for their work. They are also producing less, which is what the decline in real GDP means. The Biden administration would very much like to tell voters that we are not in a recession because of the “strong labor market,” but in reality, the price of labor has not been increasing anywhere near as quickly as the price of potatoes, to say nothing of energy. Talking up the low unemployment rate is a hollow boast when Americans are working more for less, and when so many of them have given up looking for work at all.

That labor-force-participation-rate decline is especially remarkable in light of the recent phenomenon of widespread “unretirement,” with Americans who thought they had retired being forced back into the workforce by rapidly increasing prices.