A year's worth of inflation-adjusted wage gains vanished in just four months, leaving workers little better off than when President Trump returned to the White House.

Why it matters: The reversal shows how the recent energy-driven inflation surge is eating into household purchasing power. Real pay for rank-and-file workers is up just 0.1% since Trump took office in January 2025.

• Rising real wages helped underpin the White House's case that the economy was improving. That advantage has now largely disappeared.

By the numbers: After rising during 2025, real wage growth has effectively stalled across the labor market. Inflation-adjusted hourly earnings for all private-sector workers are unchanged from last January.

• Earnings for production and nonsupervisory workers — a widely used proxy for private-sector working-class employees — are up just 0.1% over that time frame.

Zoom in: Average hourly earnings for production and nonsupervisory workers — a widely used proxy for private-sector working-class employees — have risen a cumulative 4.9% since January 2025.

• But inflation, as measured by the Consumer Price Index, is up just as much over the same period.

Flashback: Exactly a year ago, White House officials highlighted this gauge as evidence that working-class Americans were seeing their paychecks stretch further.

• Now, by this measure, real pay has given back nearly all of those gains.

Reality check: Calculating real wages is a fraught exercise, in that you have to select both a measure of nominal wages and a measure of inflation.

• All the available options have flaws — so it is best to take these numbers more as directional signals.
• For example, the average hourly earnings measure cited above doesn't account for "composition effects," meaning it can be distorted depending on whether higher-wage or lower-wage sectors are adding jobs. It also doesn't account for the value of non-cash benefits like health care.
• The Employment Cost Index, by contrast, adjusts for those factors but is released only quarterly and with a longer delay.

What to watch: The CPI rose 4.2% for the 12 months through May, the fastest pace since April 2023.

• The surge was driven in large part by higher energy prices linked to the Iran war.
• The silver lining: Inflation looks so far contained to energy-related sectors, rather than bleeding to other household purchases as economists feared.

What they're saying: "The numbers were great," Trump said in the Oval Office, responding to a question about whether he was concerned about the inflation data released earlier yesterday.

• "I love the inflation," Trump said, later adding that oil prices were "going to come down like a rock" once the war ends.

The other side: "President Trump has always been clear about the fact that oil and gas prices — and thus overall inflation — will rapidly drop as soon as the Iran situation is resolved," White House spokesperson Kush Desai said in a statement.

• He added that before the start of the Iran war, American workers had recovered a significant portion "of the real wage losses they experienced under Joe Biden, thanks to this Administration's commonsense agenda of deregulation, tax cuts and energy abundance."

The war-driven inflation hit is spreading beyond energy and deeper into supply chains.

Driving the news: Producer prices rose 1.1% in May, matching April's increase and pushing annual wholesale inflation to 6.5%, the highest since late 2022.

• The surge was driven by higher energy costs. But the report also shows brisk price increases across a range of non-energy goods and industrial inputs.

By the numbers: Nearly 80% of May's increase in producer prices came from goods, which rose 2.8% — the largest increase since the current series began in 2009.

• Energy prices jumped nearly 11%, led by a surge of more than 20% in gasoline prices.

A narrower measure that excludes energy shows wholesale inflation was still hot.

• Excluding food, energy and trade services, PPI gained 0.8% in May, the largest monthly increase since March 2022.
• Price increases extended beyond fuel into industrial chemicals, plastic resins and other production inputs, a warning that cost pressures are spreading through the supply chain.

The bottom line: Businesses are facing a widening source of cost increases, raising the odds that consumers might have to absorb more of the impact.

• "We now have a more complete picture of the U.S. inflation situation, with the main question right now being who will have to absorb the widespread cost pressures," Peter Boockvar, chief investment officer of OnePoint BFG Wealth Partners, wrote in a note this morning.