Saad Ullah
⬤ Real wages in the United States have not risen for more than two years and the figures trouble analysts. Worker morale rose and fell with those wages - it dropped when prices surged plus edged up only while inflation slowed. Since early 2023 however, the real value of pay has stayed almost unchanged.
⬤ Paychecks lost purchasing power in 2021, when inflation accelerated. After price increases eased, wages regained a small share of that lost ground. From the start of 2023 onward, the year-over-year change in real wages has stayed near zero - earnings barely match the cost of living.
⬤ Some observers doubt that the official inflation index reflects the full burden on households. Average hourly earnings, when set against consumer prices, show almost no net gain even though headline inflation has fallen sharply. This standstill underlines the difference between raises in dollar terms and raises in buying power.
⬤ Because real pay is not rising, households remain under financial strain, a situation that may curb spending but also erode confidence. Worker mood tracks real earnings so closely that a genuine rise in purchasing power appears necessary before public sentiment improves.
Saad Ullah
