It depends on which years you’re looking at. Both sides are going to look at the same data and use numbers which benefit them the most.
“Indeed, overall inflation outstripped pay rises in every month from April 2021 to early 2023. That started to change in earnest last summer, as employees’ pay packets began to outgrow inflation, resulting in “real” wage gains for the first time in 2 years. Annual wage growth hit its 2023 peak in July at 5.1%, and it hasn’t fallen below the inflation rate since.”
https://www.chartr.co/stories/2024-01-08-2-wage-growth-outstripping-inflation
Yep. And, as your chart shows, we had a huge increase in wages in early 2020. That wasn't because employers suddenly started to pay more per hour. It was because lots of people dropped out of the workforce or got laid off. They were disproportionately in the lower half of the wage spectrum, so taking them out increased the average. So, when we measure wage growth, we should really start back in 2019 before covid hit.
If I remember correctly inflation is higher if you are looking at it from the start of inflation but wages are higher if you look at just the past 1-2 years.
This is correct, I’ve never denied statistics like some people on here seem very keen on doing when it doesn’t fit their narrative
But let’s be clear, there isn’t a universe where Trump would be in office and magically take away the effects of inflation when global supply chains are being disrupted. That is fantastical strongman thinking with no factual basis behind it
And even if you do want to argue that government action had a bigger effect on inflation than just natural economic forces (it didn’t), Trump certainly isn’t earning any marks there either. He presided over interest rates being in the ground before Covid hit, and certainly was not shy with the purse strings himself.
So yes, ultimately inflation happened, things have been improving, and ultimately the argument that certain people like to make about it (that it was Biden’s fault) is ridiculous
Just curious — what is ‘fantastical strongman thinking’?
I think you built yourself a nice straw man there with “Trump magically take away the effects of inflation”. I don’t think many sane individuals are arguing that.
They absolutely are arguing that. Here it is from the literal man himself
https://www.axios.com/2022/07/04/donald-trump-inflation-ukraine-war-wouldnt-happen-president
Edit: Nice to see you at least admit Trump is insane. I wonder if you’ll actually respond to this or just sheepishly slink off to repeat your arguments elsewhere
> ‘fantastical strongman thinking’
There's conspiracy theories that the inflation is caused by (probably a cabal of jewish/er-(((globalist)))) bankers who are manipulating things, and I'm sure there's a nonzero number of MAGA who believe Trump will just go and have them arrested.
That's an example of "fantastical strongman thinking".
There's also the theory I've heard floated that businesses are over-taxed, and they're just passing their tax expenses to consumers by jacking up their prices. (as if market competition weren't a thing). And so another round of tax cuts (or abolishing Income Tax and business tax altogether, and replacing it with a sales tax) will somehow fix it.
Honestly, I have been hearing this latter theory since Reagan was in office. And of course, there's no evidence for it, and in fact we've seen over the past 40 years that the only thing this does is drive up the deficit. And the corporations don't pass tax-savings on to the consumer, but rather, they stuff that 'extra' money into their pockets via stock buybacks and executive bonus packages.
So now that it’s clear that no only do you think Trump actual position is so ridiculous you consider it a strawman, but that you also consider him insane… are you voting for him?
>And even if you do want to argue that government action had a bigger effect on inflation than just natural economic forces (it didn’t)
I love how you say you don't dismiss facts when they doesn't fit the narrative...but then trot out this line. Perhaps you'd like to call up Janet Yellen and let her know she's wrong about US spending and its affect on inflation? Perhaps you'd also like to call up the CBO and thank it for letting us know the Inflation Reduction Act added to inflation woes? Regardless, I haven't heard anyone of any importance say that Biden is solely responsible for inflation. So...way to create that narrative out of thin air.
>So yes, ultimately inflation happened, things have been improving, and ultimately the argument that certain people like to make about it (that it was Biden’s fault) is ridiculous
Likewise, playing cheerleader for Biden when there is information out there that contradicts your position is ridiculous.
It's not that hard, buddy. Just open that google machine and get smart.
Cmon, don’t play that game with me. Just like with the literal “I did that” gas price stickers (id like you to explain how that’s all Biden’s fault btw), whenever Trumpers are bringing up inflation it’s with the specific intent to cast it as Biden’s fault. Don’t play this coy game, it’s happening in this very thread
Also I’m not “dismissing it out of hand”, there’s actually [multiple studies and data](https://www.forbes.com/sites/qai/2022/08/25/does-government-spending-cause-inflation/#) to back it up.
And yeah you hadn’t seen “anyone of importance” claim that Biden is solely responsible for inflation. Idk, does [Trump](https://www.axios.com/2022/07/04/donald-trump-inflation-ukraine-war-wouldnt-happen-president) count? Maybe you didn’t look hard enough
> “I did that” gas price stickers (id like you to explain how that’s all Biden’s fault btw)
The argument I've heard is when he blocked drilling in the Alaska wildlife preserve. That's been pretty well studied, and wouldn't have an effect on prices for at least 20 years, and in the end, oil producers have the freedom to ramp up or cut production and they generally choose to keep it dialed back to keep supply tight and prices high. In fact: Trump encouraged a supply cut in 2020, in concert with OPEC+, by the way.
they also keep changing the "basket" of goods they use in determining inflation - and not counting housing etc.
i no longer generally trust statistics unless i'm sure the metrics / methodology hasn't changed within the past five years or so - you'd be amazed how many metrics have been "changed" in their methods of determining such. kind of disgusting really.
It comes down to what period of time you're looking at. If you limit to just the past 6 or maybe 12 months then yes wage growth has been higher than inflation. This is true. BUT if you look at the past 3 years you see that the inflation graph has a huge hump that goes up all the way to just under 10% and took time both to get there and to come down. During most of that time inflation was well above wages.
What's relevant to right now is that cumulative wage growth since then is not higher than cumulative inflation since then and that's why people are so down on the economy. Basically prices are up roughly 20% due to cumulative inflation over the past 4-ish years but wages are not even close to up 20%. That's why all the bleating about "but wage growth outpaced inflation for months now!" is not convincing anybody who actually has to pay for their own survival.
Basically with any stat it all just depends on how you frame it and what numbers you pull.
I've got no hard numbers in front of me but I'd take a confident guess that inflation is a fair bit higher than wage growth if you're looking at a longer time line (2-3 years) and a wider job market.
Shorter timeline and specific job markets I could expect better wage growth but call it a bit cherry picked.
I'm happy for anyone to prove me wrong and provide better numbers.
Some wages are going up at a higher rate than the current inflation rate.
However, for the last few years they have lagged dramatically behind resulting in most people having far less purchasing power today than they had in 2020.
Most wages have increased more than inflation for over the past year.
And if you take the average wage in January 2020 and pop it into an inflation calculator, it's less than the average wage today, meaning most people have more purchasing power today than they had in 2020.
I think the cause of the initial inflation is pretty clear - artificial demand created by pumping money to folks during the covid QE initiatives at a time when supply couldn't keep up. Both of the past 2 administrations played a part in that. Think hospitality industry spending, home improvements, or even just discretionary amazon.com purchases.
More recently the fed hiked rates to get that back under control, and it has mostly worked as expected.
I'm just not sure the fed hikes work their way across the economy at equal speeds. Hospitality and discretionary costs might be back down to earth. But mission critical expenses such as food and rent are lagging behind.
At least it seems that way to me.
I don’t think that’s “pretty clear” at all lmao
I think it’s actually pretty clear that global supply chains being severely disrupted played a much bigger role in increasing prices of the various products that rely on them across the entire economy
I’m not saying it had no effect, and I’m happy to see you at least call out that both administrations contributed, but I think you’d be extremely remiss to leave out what the largest cause is
Trump directly injected $$$ into US citizen pockets. While the people providing those goods and services could not deliver.
Biden doubled down and did the same thing.
I'm not an economist.
But put free cash into people's hands, they will try to spend it.
Combine that with a supply chain that can't keep up with cash injected "fake" demand. Shit sandwich.
Like I said I’m not denying it had an effect, but [multiple studies show](https://www.forbes.com/sites/qai/2022/08/25/does-government-spending-cause-inflation/#) that it was 3% of total inflation at most.
Supply chains seem like the much bigger issue here
Would we have supply chain issues if uncle Sam didn't pump shit tons of $$ into bank accounts, while the suppliers were essentially shut down?
Chicken or the Egg question I guess.
Yes, because the demand didn’t skyrocket until after COVID. That was the problem. The money they got during COVID was to pay their utility bill for a month. UE was as high as 14% during COVID. After COVID when UE went low and stayed very low, that created sky high demand. It has been under 4% for the longest stretch since the Vietnam War. But the global supply chain had not caught back up. People went on spending sprees coming out of COVID, they took the trips they couldn’t afford during COVID, or had just put off.
The global supply chain issue, coupled with low unemployment, and people spending like wild causes inflation. It’s supply and demand. One way to curb demand is to raise interest rates—which they did. The other is to put people out of work—they didn’t do that. Most economists did think we would have to put millions out of work and inevitably have a recession to get inflation under control, but that wasn’t the case. We have had low UE, good jobs numbers every month—while curbing inflation. We have had the best recovery of all the big boy countries.
Ok. You downvote me.
Almost evryone in the US got $4,000 "free money".
And that free $ had no effect on supply.
The supply chain issues had nothing to do with that?
That $4000 (which was actually more like $2400 - distributed over 2 years) was basically a rounding-error compared to the massive PPP loan fraud that happened. (where oversight was specifically removed by Republicans).
No. Demand skyrocketed. Through the roof demand.
What version were you watching?
People spending like mad from the first QE for 2 years.
Free money.
No supply.
The data on the 'why' doesn't support your thesis, nor does it explain how the UK, Aus, Europe et al all experience the same or worse levels of inflation, yet at the end of the day, the US economy is by far and away outperforming. I'd argue the industrial policies Biden got through congress has been outstanding and ensuring continued growth for the considerable future.
People who are complaining about housing costs at 7% or forgetting how insane the market was at 3%..sight unseen, waving contingencies etc etc.
>People who are complaining about housing costs at 7% or forgetting how insane the market was at 3%..sight unseen, waving contingencies etc etc.
Housing has gone through a meat grinder since 2008.
>https://fred.stlouisfed.org/series/HOUST
My understanding is most of the new housing starts since 2008 are all multi-unit homes (apartments).
The recent dip isn't a great sign, but it's nowhere as ominous as we saw after 2008, when no one was building at all.
> artificial demand created by pumping money to folks during the covid QE initiatives at a time when supply couldn't keep up
PPP loans were a much larger effect. When a "business owner" gets a check for hundreds of thousands or millions of dollars, without oversight, and that loan gets forgiven (and most of them were), they stuff that money into their greasy pockets and spend it on luxury items.
A perfect example is during that time frame, the cost of building a swimming pool (in our area) roughly doubled, between 2020 and 2022. Because demand went up. Because the number of "business owners" who suddenly had this massive pile of cash, could drop $100k on building a pool.
During that time: lumber also went up 400%. This was driven in part by the effect of PPP loans. But also, Trump's idiotic Hoover-era trade policies (tariffs).
The $1000 checks that regular folks got went mostly to pay bills they were behind on because they had to take a furlough or got reduced hours at work.
This is sort of a red herring, as very few Americans experience "average" inflation and wage growth. Your personal wages depend on your industry, location, and other factors, whereas your expenses are highly linked to your location and way of living.
So supporters of the current president will point to the graphs going up, and detractors of the current president will point at empirical people who are struggling. And both sides will think the other is denying reality.
Both can be true in a sense. You can look at overall wages and overall inflation to weigh them against each other. But I think what is having an impact on most Americans lives are specifically what has inflated the most and who was the most affected by wage growth. It also gets confusing because inflation has at this point relatively slowed down. The problem is that inflation is akin to acceleration. If I’m driving a car at 25 mph and increasing my mph by 1 every 1 minute, in 20 minutes I’m driving 45 mph. If at 45 mph I double my rate of acceleration by increasing 2 mph every 1 minute, in another 20 minutes I’m driving 85 mph. That is inflation. Now we are left with a car driving 85 mph, when most Americans feel like the car should be going 65 mph.
Inflation has happened rapidly for a lot of the core items in an average American’s budget, and we see them more regularly. If anyone remembers, used car prices shot up rapidly after the pandemic. Last I checked, prices on used cars have been rapidly decreasing and that’s great for consumers, but consumers aren’t going to an auto lot to buy used cars each week. But they are buying groceries.
Grocery prices shot up quickly, and haven’t really gone down much if at all. Rent has increased by a large amount. So has gasoline, heating fuel, and electricity. These are all items that we look at on a weekly/monthly basis. It can be easy to say consumer prices overall aren’t that bad, but when all of the core essentials are still high people feel that, know matter the number on the report.
Similarly, wages didn’t exactly see an increase across the board. I feel like a lot of entry level jobs got decent wage increases and that’s good for them, but how much more did they really get when all of the core essentials cost a lot more. And the American middle class didn’t see as much movement with their wages, but now they are getting squeezed harder because their income didn’t increase a lot, but their expenses have.
So yes things have “gotten better” in terms of the rate of inflation, and wages have increased overall. But people are barely feeling it, or feeling worse off in general.
Inflation rates no longer include the cost of borrowing money. And the cost of borrowing money has *skyrocketed* since covid. So wages have kept up with the fake inflation numbers we're seeing, but haven't nearly kept up with the real inflation. It's the working class that has to borrow so much money. They can't buy a car with cash, they borrow money. An appliance breaks down? No cash. Borrow money. That's why the working class is struggling so much while the media keeps telling them "no no, you're doing fine".
https://www.nber.org/papers/w32163?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg26
It depends on which years you’re looking at. Both sides are going to look at the same data and use numbers which benefit them the most. “Indeed, overall inflation outstripped pay rises in every month from April 2021 to early 2023. That started to change in earnest last summer, as employees’ pay packets began to outgrow inflation, resulting in “real” wage gains for the first time in 2 years. Annual wage growth hit its 2023 peak in July at 5.1%, and it hasn’t fallen below the inflation rate since.” https://www.chartr.co/stories/2024-01-08-2-wage-growth-outstripping-inflation
Yep. And, as your chart shows, we had a huge increase in wages in early 2020. That wasn't because employers suddenly started to pay more per hour. It was because lots of people dropped out of the workforce or got laid off. They were disproportionately in the lower half of the wage spectrum, so taking them out increased the average. So, when we measure wage growth, we should really start back in 2019 before covid hit.
If I remember correctly inflation is higher if you are looking at it from the start of inflation but wages are higher if you look at just the past 1-2 years.
This is correct, I’ve never denied statistics like some people on here seem very keen on doing when it doesn’t fit their narrative But let’s be clear, there isn’t a universe where Trump would be in office and magically take away the effects of inflation when global supply chains are being disrupted. That is fantastical strongman thinking with no factual basis behind it And even if you do want to argue that government action had a bigger effect on inflation than just natural economic forces (it didn’t), Trump certainly isn’t earning any marks there either. He presided over interest rates being in the ground before Covid hit, and certainly was not shy with the purse strings himself. So yes, ultimately inflation happened, things have been improving, and ultimately the argument that certain people like to make about it (that it was Biden’s fault) is ridiculous
Just curious — what is ‘fantastical strongman thinking’? I think you built yourself a nice straw man there with “Trump magically take away the effects of inflation”. I don’t think many sane individuals are arguing that.
They absolutely are arguing that. Here it is from the literal man himself https://www.axios.com/2022/07/04/donald-trump-inflation-ukraine-war-wouldnt-happen-president Edit: Nice to see you at least admit Trump is insane. I wonder if you’ll actually respond to this or just sheepishly slink off to repeat your arguments elsewhere
> I don’t think many sane individuals are arguing that. So you're calling Trump insane?
> ‘fantastical strongman thinking’ There's conspiracy theories that the inflation is caused by (probably a cabal of jewish/er-(((globalist)))) bankers who are manipulating things, and I'm sure there's a nonzero number of MAGA who believe Trump will just go and have them arrested. That's an example of "fantastical strongman thinking". There's also the theory I've heard floated that businesses are over-taxed, and they're just passing their tax expenses to consumers by jacking up their prices. (as if market competition weren't a thing). And so another round of tax cuts (or abolishing Income Tax and business tax altogether, and replacing it with a sales tax) will somehow fix it. Honestly, I have been hearing this latter theory since Reagan was in office. And of course, there's no evidence for it, and in fact we've seen over the past 40 years that the only thing this does is drive up the deficit. And the corporations don't pass tax-savings on to the consumer, but rather, they stuff that 'extra' money into their pockets via stock buybacks and executive bonus packages.
So now that it’s clear that no only do you think Trump actual position is so ridiculous you consider it a strawman, but that you also consider him insane… are you voting for him?
>And even if you do want to argue that government action had a bigger effect on inflation than just natural economic forces (it didn’t) I love how you say you don't dismiss facts when they doesn't fit the narrative...but then trot out this line. Perhaps you'd like to call up Janet Yellen and let her know she's wrong about US spending and its affect on inflation? Perhaps you'd also like to call up the CBO and thank it for letting us know the Inflation Reduction Act added to inflation woes? Regardless, I haven't heard anyone of any importance say that Biden is solely responsible for inflation. So...way to create that narrative out of thin air. >So yes, ultimately inflation happened, things have been improving, and ultimately the argument that certain people like to make about it (that it was Biden’s fault) is ridiculous Likewise, playing cheerleader for Biden when there is information out there that contradicts your position is ridiculous. It's not that hard, buddy. Just open that google machine and get smart.
Cmon, don’t play that game with me. Just like with the literal “I did that” gas price stickers (id like you to explain how that’s all Biden’s fault btw), whenever Trumpers are bringing up inflation it’s with the specific intent to cast it as Biden’s fault. Don’t play this coy game, it’s happening in this very thread Also I’m not “dismissing it out of hand”, there’s actually [multiple studies and data](https://www.forbes.com/sites/qai/2022/08/25/does-government-spending-cause-inflation/#) to back it up. And yeah you hadn’t seen “anyone of importance” claim that Biden is solely responsible for inflation. Idk, does [Trump](https://www.axios.com/2022/07/04/donald-trump-inflation-ukraine-war-wouldnt-happen-president) count? Maybe you didn’t look hard enough
> “I did that” gas price stickers (id like you to explain how that’s all Biden’s fault btw) The argument I've heard is when he blocked drilling in the Alaska wildlife preserve. That's been pretty well studied, and wouldn't have an effect on prices for at least 20 years, and in the end, oil producers have the freedom to ramp up or cut production and they generally choose to keep it dialed back to keep supply tight and prices high. In fact: Trump encouraged a supply cut in 2020, in concert with OPEC+, by the way.
they also keep changing the "basket" of goods they use in determining inflation - and not counting housing etc. i no longer generally trust statistics unless i'm sure the metrics / methodology hasn't changed within the past five years or so - you'd be amazed how many metrics have been "changed" in their methods of determining such. kind of disgusting really.
It comes down to what period of time you're looking at. If you limit to just the past 6 or maybe 12 months then yes wage growth has been higher than inflation. This is true. BUT if you look at the past 3 years you see that the inflation graph has a huge hump that goes up all the way to just under 10% and took time both to get there and to come down. During most of that time inflation was well above wages. What's relevant to right now is that cumulative wage growth since then is not higher than cumulative inflation since then and that's why people are so down on the economy. Basically prices are up roughly 20% due to cumulative inflation over the past 4-ish years but wages are not even close to up 20%. That's why all the bleating about "but wage growth outpaced inflation for months now!" is not convincing anybody who actually has to pay for their own survival.
Basically with any stat it all just depends on how you frame it and what numbers you pull. I've got no hard numbers in front of me but I'd take a confident guess that inflation is a fair bit higher than wage growth if you're looking at a longer time line (2-3 years) and a wider job market. Shorter timeline and specific job markets I could expect better wage growth but call it a bit cherry picked. I'm happy for anyone to prove me wrong and provide better numbers.
Some wages are going up at a higher rate than the current inflation rate. However, for the last few years they have lagged dramatically behind resulting in most people having far less purchasing power today than they had in 2020.
Most wages have increased more than inflation for over the past year. And if you take the average wage in January 2020 and pop it into an inflation calculator, it's less than the average wage today, meaning most people have more purchasing power today than they had in 2020.
I think the cause of the initial inflation is pretty clear - artificial demand created by pumping money to folks during the covid QE initiatives at a time when supply couldn't keep up. Both of the past 2 administrations played a part in that. Think hospitality industry spending, home improvements, or even just discretionary amazon.com purchases. More recently the fed hiked rates to get that back under control, and it has mostly worked as expected. I'm just not sure the fed hikes work their way across the economy at equal speeds. Hospitality and discretionary costs might be back down to earth. But mission critical expenses such as food and rent are lagging behind. At least it seems that way to me.
I don’t think that’s “pretty clear” at all lmao I think it’s actually pretty clear that global supply chains being severely disrupted played a much bigger role in increasing prices of the various products that rely on them across the entire economy I’m not saying it had no effect, and I’m happy to see you at least call out that both administrations contributed, but I think you’d be extremely remiss to leave out what the largest cause is
Trump directly injected $$$ into US citizen pockets. While the people providing those goods and services could not deliver. Biden doubled down and did the same thing. I'm not an economist. But put free cash into people's hands, they will try to spend it. Combine that with a supply chain that can't keep up with cash injected "fake" demand. Shit sandwich.
Like I said I’m not denying it had an effect, but [multiple studies show](https://www.forbes.com/sites/qai/2022/08/25/does-government-spending-cause-inflation/#) that it was 3% of total inflation at most. Supply chains seem like the much bigger issue here
Would we have supply chain issues if uncle Sam didn't pump shit tons of $$ into bank accounts, while the suppliers were essentially shut down? Chicken or the Egg question I guess.
Yes, because the demand didn’t skyrocket until after COVID. That was the problem. The money they got during COVID was to pay their utility bill for a month. UE was as high as 14% during COVID. After COVID when UE went low and stayed very low, that created sky high demand. It has been under 4% for the longest stretch since the Vietnam War. But the global supply chain had not caught back up. People went on spending sprees coming out of COVID, they took the trips they couldn’t afford during COVID, or had just put off. The global supply chain issue, coupled with low unemployment, and people spending like wild causes inflation. It’s supply and demand. One way to curb demand is to raise interest rates—which they did. The other is to put people out of work—they didn’t do that. Most economists did think we would have to put millions out of work and inevitably have a recession to get inflation under control, but that wasn’t the case. We have had low UE, good jobs numbers every month—while curbing inflation. We have had the best recovery of all the big boy countries.
Ok. You downvote me. Almost evryone in the US got $4,000 "free money". And that free $ had no effect on supply. The supply chain issues had nothing to do with that?
That $4000 (which was actually more like $2400 - distributed over 2 years) was basically a rounding-error compared to the massive PPP loan fraud that happened. (where oversight was specifically removed by Republicans).
No. Demand skyrocketed. Through the roof demand. What version were you watching? People spending like mad from the first QE for 2 years. Free money. No supply.
The data on the 'why' doesn't support your thesis, nor does it explain how the UK, Aus, Europe et al all experience the same or worse levels of inflation, yet at the end of the day, the US economy is by far and away outperforming. I'd argue the industrial policies Biden got through congress has been outstanding and ensuring continued growth for the considerable future. People who are complaining about housing costs at 7% or forgetting how insane the market was at 3%..sight unseen, waving contingencies etc etc.
>People who are complaining about housing costs at 7% or forgetting how insane the market was at 3%..sight unseen, waving contingencies etc etc. Housing has gone through a meat grinder since 2008. >https://fred.stlouisfed.org/series/HOUST My understanding is most of the new housing starts since 2008 are all multi-unit homes (apartments). The recent dip isn't a great sign, but it's nowhere as ominous as we saw after 2008, when no one was building at all.
> artificial demand created by pumping money to folks during the covid QE initiatives at a time when supply couldn't keep up PPP loans were a much larger effect. When a "business owner" gets a check for hundreds of thousands or millions of dollars, without oversight, and that loan gets forgiven (and most of them were), they stuff that money into their greasy pockets and spend it on luxury items. A perfect example is during that time frame, the cost of building a swimming pool (in our area) roughly doubled, between 2020 and 2022. Because demand went up. Because the number of "business owners" who suddenly had this massive pile of cash, could drop $100k on building a pool. During that time: lumber also went up 400%. This was driven in part by the effect of PPP loans. But also, Trump's idiotic Hoover-era trade policies (tariffs). The $1000 checks that regular folks got went mostly to pay bills they were behind on because they had to take a furlough or got reduced hours at work.
This is sort of a red herring, as very few Americans experience "average" inflation and wage growth. Your personal wages depend on your industry, location, and other factors, whereas your expenses are highly linked to your location and way of living. So supporters of the current president will point to the graphs going up, and detractors of the current president will point at empirical people who are struggling. And both sides will think the other is denying reality.
Both can be true in a sense. You can look at overall wages and overall inflation to weigh them against each other. But I think what is having an impact on most Americans lives are specifically what has inflated the most and who was the most affected by wage growth. It also gets confusing because inflation has at this point relatively slowed down. The problem is that inflation is akin to acceleration. If I’m driving a car at 25 mph and increasing my mph by 1 every 1 minute, in 20 minutes I’m driving 45 mph. If at 45 mph I double my rate of acceleration by increasing 2 mph every 1 minute, in another 20 minutes I’m driving 85 mph. That is inflation. Now we are left with a car driving 85 mph, when most Americans feel like the car should be going 65 mph. Inflation has happened rapidly for a lot of the core items in an average American’s budget, and we see them more regularly. If anyone remembers, used car prices shot up rapidly after the pandemic. Last I checked, prices on used cars have been rapidly decreasing and that’s great for consumers, but consumers aren’t going to an auto lot to buy used cars each week. But they are buying groceries. Grocery prices shot up quickly, and haven’t really gone down much if at all. Rent has increased by a large amount. So has gasoline, heating fuel, and electricity. These are all items that we look at on a weekly/monthly basis. It can be easy to say consumer prices overall aren’t that bad, but when all of the core essentials are still high people feel that, know matter the number on the report. Similarly, wages didn’t exactly see an increase across the board. I feel like a lot of entry level jobs got decent wage increases and that’s good for them, but how much more did they really get when all of the core essentials cost a lot more. And the American middle class didn’t see as much movement with their wages, but now they are getting squeezed harder because their income didn’t increase a lot, but their expenses have. So yes things have “gotten better” in terms of the rate of inflation, and wages have increased overall. But people are barely feeling it, or feeling worse off in general.
Inflation rates no longer include the cost of borrowing money. And the cost of borrowing money has *skyrocketed* since covid. So wages have kept up with the fake inflation numbers we're seeing, but haven't nearly kept up with the real inflation. It's the working class that has to borrow so much money. They can't buy a car with cash, they borrow money. An appliance breaks down? No cash. Borrow money. That's why the working class is struggling so much while the media keeps telling them "no no, you're doing fine". https://www.nber.org/papers/w32163?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg26