Below is a chart of the Case-Shiller National Home Index, the S&P 500, average hourly wages and household debt per working person, borrowed from Sudden Debt, who expects a deflationary, rather than inflationary “correction”.  We tend to agree. Unless hourly wages (the red line in the chart) begin to rise in nominal terms to support the recently rising commodity prices and temporarily rising stock prices, these “recoveries” will not be accompanied by a recovery in the real economy.     Swamp Report adds the following question: Will the bubbles overshoot below their trend lines? It seems likely that house prices and household debt will fall at least to the trend line of income as the hourly wage can not support the present levels of these variables.  The S&P will likely fall below the trend line, as it has often times in history.  Both of these adjustments need to occur before we can say the bubbles have been dealt with…