Economy

New Data Shows Inflation Has Wiped Out a Year of Wage Gains

JM Ashby
Written by JM Ashby

A recent report from the Labor Department showed that real wages are effectively flat (just 0.1 percent above inflation in June) but more recent and accurate data from the Bureau of Labor Statistic (BLS) tells a slightly more bleak story over a longer period of time.

The cost of living reached a 6-year high in June according to the Bureau, and inflation has erased all wage gains seen over the past year.

From the Wall Street Journal:

The increase in the cost of living rose to a 12-month pace of 2.9% from 2.8%, marking the highest level in more than six years, the government said Thursday. A year ago the 12-month rate stood at just 1.6%. [...]

A more closely followed measure that strips out food and energy, called the core CPI, advanced 0.2% last month. The yearly increase in the core rate edged up to a more modest 2.3%, the highest benchmark in a year and a half. Core CPI hasn't grown faster than 2.3% since the Great Recession.

Looking more closely at the source of inflation and the higher cost of living, I think we can see where this is going.

Inflation has shot up over the past year owing to rising oil prices, higher rents, more expensive medical care and growing bottlenecks in the economy for skilled workers and certain key materials.

The trucking industry, for example, says it can hardly find any more drivers at a time when many older riggers are retiring. That’s causing shipping costs to go up.

Oil, health care, material shortages, and labor shortages.

What are Trump's policies (if we can even call them "policies") doing?

Trump raised the price of oil by killing the Iran nuclear deal. He's raising the cost of health care by sabotaging the Affordable Care Act. He's raising the cost of materials through his trade war. He's also creating an even larger labor shortage by deporting every single immigrant he can get his hands on and making it far less desirable to even work here legally.

And there's no reason to think any of these things are going to end.

  • muselet

    Look for the Federal Reserve to panic over this and declare inflation out of control, which means downward pressure on wages (because wages are the only meaningful driver of inflation, dontcha know).

    As long as the rubes don’t put two and two together, Donald Trump will continue to pursue actions that undercut the US economy and US trade relations; if the red-hatted horde does figure it out, Trump and they will blame Germany and furriners and Democrats for the damage.

    Some days, I’m not sure how we can dig our way out of this mess.

    –alopecia

  • Aynwrong

    Yeah, let’s keep handing total power over to the GOP. It’s working wonders.

    MAGA, my ass.

    • Draxiar

      Trickle down any minute now…