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American consumers have been frustrated by high prices over past years, but there’s some good news: wages have outpaced inflation since the start of the COVID-19 pandemic.Since 2020, average hourly wages for most US workers have risen faster than the consumer price index, meaning income has maintained its purchasing power against rising prices.Furthermore, real wages — earnings adjusted for inflation — have been positive over the past year, according to the Bureau of Labor Statistics, meaning workers are gaining purchasing power.But while wage gains show promising signs for US workers, it can take longer for consumers’ perspectives to shift; many Americans are still reckoning with past years’ sticker shock and high housing costs.
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Economic data vs consumer sentimentNearly four in five US voters said price increases were the top source of their financial stress in the last three months, according to the FT-Michigan Ross Poll.While wage gains have outpaced inflation, it can be difficult for consumers to feel the growth, and plenty of people still miss the “good old days” of lower prices.According to Bankrate Analyst Sarah Foster, that’s because economists and consumers see prices differently.Economists pay attention to inflation indicators which measure the rate of change of prices. Meanwhile, many consumers focus on the price levels for individual goods (like grocery store receipts) and how they compare to previous years, Fos …
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