Inflation has cooled since last summer – a welcome relief for consumers nationwide. But that doesn’t mean your dollars are going father today than they did in June or July. According to new government data, wages and benefits – the Employment Cost Index – wage earners are still losing ground to inflation:
Nationwide, wages and salaries rose 5.1% in the 12 months through December, according to the BLS. The year-end inflation rate was 6.5%.
As The Wall Street Journal notes, this marks two consecutive years that inflation has outpaced wages and benefits. But there’s a possibility the losses could end this year:
During the past two years, supply-chain disruptions related to the pandemic and higher energy costs linked to Russia’s invasion of Ukraine caused inflation to outpace wage gains. The effect of these supply factors is now fading, putting less pressure on consumer prices.
Both pay increases and inflation have been cooling since the middle of last year. But for the past two months inflation has been easing more than wages, giving paychecks a boost.
As a result, this could be the year that workers start seeing real wage gains again.
Could be, might be…it’s an open question. The hope, of course, is that inflation continues to retreat, albeit slowly. One other contributing factor to cooling inflation: there’s less government stimulus in the economy today than there was even a few months ago. And as a paper from the St. Louis Federal Reserve notes, the unprecedented trillions of dollars the Trump and Biden administrations pumped into the COVID-era economy may have played a “sizable role” in pushing up prices.
As there’s no such thing as a free lunch, those government stimulus efforts were largely financed with borrowed money…which must be repaid, with interest. And inflation rears its ugly head there, too:
According to CBO’s projections, interest payments would total around $66 trillion over the next 30 years and would take up nearly 40 percent of all federal revenues by 2052. Interest costs would also become the largest “program” over the next few decades — surpassing defense spending in 2029, Medicare in 2046, and Social Security in 2049.
Fingers crossed, then, that wages catch up with and surpass inflation this year. Because we’re going to need every dime of those gains to cover the government’s IOUs.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
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The Inflation Report is a complete Joke. 6.5% isn’t even close to the Real Inflation Americans are experiencing. So called “Economists” look at a few selected items and base their Inflation Percentage estimate on that, but it in No Way, Shape or Form reflects the Very Real Inflation we’re paying. Eggs- $8-$12/ dozen, Hamburger- $5+/lb, Gas $4/gallon and climbing.
Biden can crow and toot his butt trumpet about “How his economy is working,” but it’s all a Big Fat Lie.
If you buy what the BS Biden’s selling, you’re dumber than he is.