According to a report from Yahoo! Finance, underscoring Americans’ deepening concerns about affordability: Their pay gains are on the verge of being overtaken by price increases.
Last month, prices rose 3.3% on an annual basis, government data published Friday showed, edging toward the 3.5% yearly growth seen in average hourly earnings for March. Drilling down into monthly swings, the whopping 0.9% price hike between February and March sent recent growth in real average hourly pay into negative territory, with workers netting $0.07 less per hour than the month prior as gas prices spiked.
“Inflation is almost eating up the entirety of Americans’ wage gains already,” Heather Long, chief economist at Navy Federal Credit Union, said in a note. “It will almost certainly mean inflation is above wages by April or May. That is painful. That means many Americans truly are under pressure financially and having to make tough decisions about what to buy and what to skip.”
That mismatch between prices and pay is being felt unequally. An analysis from the Bank of America Institute, for example, found that among high-income households, after-tax wage growth charged ahead by 5.6% in March compared to a year prior. For low- and middle-income households, gains were 1% and 2%, respectively, falling especially short of recent price increases.
All of this could eventually weigh on spending.
