Jan 8, 2024 - Business

Charted: Pay is beating inflation again

Data: FactSet, U.S. Bureau of Labor Statistics; Chart: Axios Visuals

Americans are now getting an actual pay raise, even after accounting for inflation.

Why it matters: Rising real — that is, inflation-adjusted — earnings are a basic indication of improving standards of living.

Driving the news: Average hourly earnings of private sector employees rose at an annual rate of 4.1% in December, according to Friday's job report, a smidge higher than the 4% gain in November, and roughly 1 percentage point above the 3.1% annual rise inflation that month.

  • December CPI data is due Thursday morning.

Yes, but: Don't expect spontaneous parades. From April 2021 to June 2023 — more than two years — inflation was significantly higher than earnings, meaning that workers' standards of living fell sharply.

The bottom line: It'll likely take a long stretch of real wage gains before Americans feel better after that inflationary pinch.

Go deeper: Why 2024 could be a year of American optimism

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