The economic data flowing out of the federal government continues to paint a troubling picture of inflation, and what it means for American wage earners. In short? Their paychecks aren’t keeping pace with prices:
Rising prices on everything from groceries to gasoline have eaten away the wage gains workers have seen since the start of the year, leaving most Americans earning less than they were before the pandemic began and derailing the White House’s argument that paychecks have grown under President Joe Biden’s tenure.
Prices climbed 0.5 percent over the month from June to July, a slower pace than in recent months but still sizable enough that it outpaced the healthy wage gains workers across the income spectrum have received. As a result, real earnings decreased 0.1 percent over the month, government data shows.
Shorter version: workers are losing ground…
Even as compensation rose at a 2.8 percent annual rate in the three months ending in June, prices rose faster — leaving compensation lower than it was in December 2019 once it’s adjusted for inflation, according to a recent analysis by Jason Furman, who served as a top economic adviser in the Obama administration.
“It means that households are falling behind,” Furman, now a professor at Harvard, said in an interview. “When you have a hot economy, you get faster wage growth and you get faster price growth. And right now, the price growth is winning the race.”
When even members of the old Obama economic team are calling your “there’s no inflation” mantra bunk, you’ve got problems. It would seem Mr. Biden has a lot of them these days.