At first glance it seems like we had good news on wages. Sure, wage inflation is lagging behind consumer inflation, so we are, on average, getting worse off. But at least August saw a big improvement on July. There is a snag, however. Drill in, and you find that that the public sector is still accounting for the bigger wage rises, and as we all know, this will be coming to an end soon.

In all, average earnings including bonuses were up 1.7 per cent in the year to August, from 1.3 per cent in July. Actually, bonuses had a negative contribution to the figure. Remove them from the equation and wages were up 2 per cent.

But in the private sector, wages including bonuses were up by just 1.2 per cent. In the public sector wages were up 2.9 per cent.

Bearing in mind inflation according to the CPI is 3.1 per cent, and according to the RPI is 4.6 per cent, then you can see that we are getting a lot worse off.

Next year VAT is going up. Child benefit is to be removed for 40 per cent taxpayers in a couple of years, and then next week there is something else happening that is quite significant. What is it now? Oh yes, that’s right, it’s the government spending review.

It seems as sure as eggs are eggs, that public sector wages will be rising at a much slower rate next year.

It is perhaps no surprise that the latest consumer confidence index from the Nationwide, out yesterday, dipped nine points to 53, the lowest reading in over a year.

There are important implications in these wage inflation stats.

First, they show how there is virtually no inflationary pressure coming from wages. Inflationary spirals have been set off in the past when wages rose, driving up prices, leading to higher wages again. There isn’t the vaguest hint that such a spiral is building to set in any time soon.

The other point is that it shows how the next year or so is going to be a struggle. Bizarrely, thanks to lower interest rates and the surprising small falls in unemployment, the average households were no worse off during the recession than in the year before the recession. See: What kind of recession was that? – households were no worse off

It may have been that the resilience of domestic disposable income during the recession is what propped households up, and stopped the falls of 2008 becoming a rout in 2009.

The recession just ended may have been the worst since the 1930s, but for your typical household there was a disconnect between what the media were saying in terms of how bad things were, and how it actually felt.

There is, alas, a chance that the pain households avoided in 2008 and 2009 will set in next year. This may or may not spark off another recession, but for households, and indeed the housing market, it will feel like it.

And that brings us to the latest job stats. Data out yesterday from the ONS revealed a strong rise in employment in the three months to August, but alas, claimant count unemployment rose in August, and the number of job vacancies fell to their lowest level since last year. Capital Economics is now predicting that unemployment will rise to three million by 2012. It seems the predictions of escalating unemployment we saw at the start of the recession may come true, but over a much delayed timetable.

Of course, the rather worrisome tide can be stemmed, and even reversed, by giving greater encouragement to those who lose their jobs to go it alone and try the brave world of entrepreneurism. See today’s other main piece: Entrepreneurs bank picks up steam, as start ups steam ahead.

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