A comparison between CPI, chained CPI, PCE price index, and HICP deflation:
Figure 1: Average hourly earnings, CPI deflated (blue), chained CPI deflated (green), PCE price index – market based deflated (tan), and HICP deflated (red), all in 2019$. Chained CPI, HICP deflated by author using X-13. Source: BLS, BEA, European Commission.
Estimated real median income through October, from MotioResearch.
I discuss consumption and the consumption outlook in light of income and inflation trends with Justin Ho on Marketplace today.
The title of the post is “Average Real Wages (Still) Rising Faster Than Inflation,” but surely you meant nominal wages are rising faster than inflation (and hence real wages are rising). In any event, the chart shows real wages but not inflation, so if the title is correct there’s still something off. Also, could I ask you’re deflating US wages with European consumer prices?
HB: Sorry, too much turkey! Yes, nominal wages rising faster than inflation however measured. Have fixed title.
The HICP is the series constructed by BLS for US (it’s a research series). For some reason FRED credits European Commission.
Off topic – Syria heating up:
Wednesday, a Syrian rebel group began a new offensive. Yesterday, there were reports they had captured 32 towns:
https://www.aa.com.tr/en/middle-east/syrian-opposition-forces-claim-seizing-32-villages-areas-in-western-aleppo/3407047
Today, rebel forces are in Aleppo, Syria’s second largest city:
https://apnews.com/article/syria-attack-clashes-aleppo-9c07da6f83036f34d4b18a479de9d085
This is not your garden variety dust up “over there”. Syria has, since 2011, been the largest source of displaced people in the world. The U.S., Russia, ISIS, Turkey, Iran, Kurdish nationalists and any number of Syrian seperatist and rebel groups are operating in Syria. Russia reports bombing rebels in response to this new advance, and Russian ground forces have come under attack.
Tulsa Gabbard, Trump’s choice to be the Director of National Intelligence, has faced criticism for a grandstanding visit with Syrian strong-man Assad in 2017. This new round of Strian violence could complicate her confirmation, though Senate Republicans seem to have limited stomach for “advice and consent” regarding Trump nominees so far.
Happy Holidays.
“We advise you not to do that, but we’ll consent if you do.”
OK, on average wages are rising faster than inflation. I saw a graph on X aka Twitter that showed wage trends by income levels/classes. I don’t recall the source. The graph indicated high income wage growth has grown much faster than medium and low income wage growth patterns. That seems to be the crux of the problem. It would be interesting to see your take and your data sources in this detail.
Michael: See here for data up to 2023M08 data. See this post for some data up to 2023M12, where I use leisure and hospitality real wages as proxy for below median wages. Data sources are cited in the notes to the figures.