January 29, 2023

Real Hourly Earnings Decline for your 21st Straight Month

Simply put, you are earning more, but you can afford to buy less.

Inflation continues to eat up your own paycheck.

For the 21st month in a row, average hourly cash flow failed to keep up with rising prices.

On the surface, it seems workers made solid benefits in December. Average hourly cash flow were up by four. 8% year over 12 months, according to  the most recent Bureau of Labor Statistics data . But when you element in the 6. 5% CPI, your real wages fallen by 1 . 7%.

And on a weekly basis, average earnings fell by 3. 1%, factoring in a 1 . 4% fall in the number of hours proved helpful.

Simply put, you’re earning more, but you can afford to buy less.

Remember, the price increases are even worse than the government data shows. The government uses  a cooked CPI formula that will understates the actual rise in costs . Based on the  formula used in the 1970s , CPI is closer to double the official numbers. Which means your real wages have fallen somewhere in the community of 4% in the real world where you actually live.

If you want a silver lining, month-on-month, real wages do increase slightly in December. Typical hourly earnings were upward 0. 3% and CPI dipped by -0. 1%, yielding a 0. 4% real wage gain.

The bad information is when you factor in a 0. 3% decline in the average work week, your own weekly wage gain falls to a pay 0. 1% month on month.

And more bad news — if you don’t drive a lot, you’re not benefitting significantly from the cooling CPI.   Falling energy prices papered over the fact that prices still rise   in virtually every other category.

Many pundits within the mainstream blow off pumpiing by pointing out that wages rise along with prices. But as this data displays, wages rarely rise perfectly pace as prices. Which means inflation puts a significant press on the pocketbook, at least in the short term.

You’re without doubt feeling that squeeze nowadays.

But regardless of nearly two years of declining real wages, pundits maintain telling us that American consumers are “ healthy. ” After all, they continue to invest. How is this possible?

Credit cards .

Americans are burning up their plastic in order to make ends meet in these inflationary moments. Revolving credit, primarily highlighting credit card debt, rose by another $16. 4 billion within November. To put the 16. 9% increase into perspective, the annual increase in 2019, prior to the pandemic, was three or more. 6%. It’s pretty very clear that with stimulus cash long gone, Americans have turned to plastic in order to make ends meet because prices continue to skyrocket.

In  a current podcast , Peter Schiff pointed out that this reliance on credit cards only increases inflationary pressure.

Consumers are dealing with rising costs not so much by cutting back and purchasing less, although in some conditions they are. But they’re also taking advantage of credit so that they can simply keep buying the same amount and just making up the difference simply by borrowing money. So , the particular Federal Reserve is still maintaining interest rates too low and enabling credit to grow too plentifully so that additional credit is available to consumers to continue in order to bid up higher prices. And so they’re not becoming priced out of the markets because they’re staying in the market because of the access to credit. So , put simply, the inflation is ongoing in the credit markets. ”

That means real wages will likely continue to keep shrink in the months ahead.

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