If you feel like your paycheck isn't keeping up with inflation, you're not alone. And that may be correct.
Approximately three-quarters of respondents Wall Street Journal national survey Officials said this week that the cost of everyday goods and services has outpaced household income growth over the past year.
Despite the fact that inflation, which has seen prices for food and other essentials rise by more than 20% since Biden took office, has subsided sharply this year, rising 2.4% in September compared to a peak of more than 9% in mid-2022. , is. According to the Ministry of Labor.
Ted Jenkin, a business consultant and co-founder of oXYGen Financial, said one of the key issues for consumers is that while wages are keeping up with inflation on some measures, after-tax wages are not. It is said that there is no such thing.
“If wages grew 4% last year and taxes eat up 1% of that increase, that leaves Americans with just 3% of real wage growth,” Jenkin told the Post. Ta. “The costs Americans incur for car insurance, to maintain their homes, to buy groceries, and to send their children to school far exceed this 3%.”
Since February last year, wages have risen faster than the average rate of inflation. According to the Bureau of Statistics. But price increases during the pandemic have far outpaced wage growth, suggesting that U.S. workers may feel their hard-earned raises have been offset by higher prices.
Buoyed by inflation that has eased in recent months, the Federal Reserve decided to cut interest rates by half a percentage point in September to address pressing concerns about the job market.
Despite this, around 38% of voters said the cost of living was still rising, putting a huge strain on their families, according to the magazine's late August survey. This is the highest level since the Journal began asking the question in November 2021, when inflation was much higher than it is now.
Ken Mahoney, CEO of Mahoney Asset Management, told the newspaper: “Inflation is not accepted by people as they are still adjusting to an unfortunate new normal, but it is to be expected. ” he said.
“Even as economic indicators improve, prices for the average American remain unchanged. [who] “They're probably not paying attention to the economic data the way financial market players are, and that's what's making people so anxious,” Mahoney said.
For example, consumer sentiment remains well below pre-pandemic levels, according to a University of Michigan consumer survey, but experts say such reports can be misleading. SMI Group CEO Kenin Spivak said the same is true for employment data.
“Unemployment is low, but more people are finding only part-time work or dropping out of the labor force,” Spivak told the Post.
The inconsistency poses a problem for Vice President Kamala Harris, as voters are giving former President Donald Trump a lead on which candidate is better suited to tackle the economy, according to the paper.
“A change of administration could offer hope that the outlook will improve, especially if Trump wins the election,” Spivak told the Post. “But no matter who wins, a change in government will probably change consumer attitudes.”
Despite strong economic indicators, inflation remains paramount among consumers' concerns, and it's not just rising prices for goods and labor that are causing problems, H Squared Research says. said Hita Herzog, Chief Research Officer.
“Retailers, whether they admit it or not, simply don't want to lower prices,” Herzog told the Post. “Especially for customers who are not price sensitive, retailers serving those customers are more likely not to lower the price needle.”
