Weekly earnings fall by 0.8 percent after inflation. The Bureau of Labor Statistics (BLS) reported that the Con-sumer Price Index for All Urban Consumers (CPI-U) rose 0.8 percent in July, driven primarily by rising food and energy prices. The core index, which filters out prices for food and energy goods, rose 0.3 percent for the second straight month, indicating that production input costs are increasingly being passed onto consumers in the form of higher retail prices. After accounting for consumer price inflation, BLS noted that hourly earnings declined by 0.6 percent in July, marking the fifth straight month that workers have seen their wages fall. Furthermore, as employ-ers have been forced to cut back on hours in order to trim costs, weekly earnings fell by more than 0.8 percent and are now over 3 percent lower than last year’s weekly pay. (See Chart)

Claims for unemployment insurance re-main high at 450,000. For the second straight week, initial claims for unemploy-ment insurance was at a level comparable to those witnessed in the midst of the previous recession. Though the number of claims fell slightly to 450,000 for the week ending August 9, it was far higher than any of the weekly claims totals seen during the first six months of the 2001 slowdown. The 4-week mov-ing average reached 440,050, marking the fourth consecutive week that the average has increased.

Retail sales weighed down by weak demand for automobiles. The Census Bureau reported that retail and food services sales fell 0.1 percent in July though the figure increased 0.4 percent excluding the motor vehi-cles sector. After retail sales grew by about 6 percent each year between 2004 and 2006, the yearly growth rate has dropped to between 2 and 3 percent in 2008. The automobile sector has become a considerable drag on total sales, registering eight consecutive months of year-over-year declines. In July, motor vehicle and parts dealers’ sales were more than 10 percent below July 2007 levels.