Over the past few years, median weekly earnings have increased by 24%, outpacing the inflation rate by 2.3%. Blue-collar workers have seen their earnings climb by 3.8%, compared to a 1.6% increase for white-collar professionals. This trend has improved the purchasing power for the median worker and American households, although not everyone has felt the benefits equally.
While consumer confidence has risen, it remains below pre-pandemic levels, indicating a disconnect between the strong economy and people’s perceptions of it. Inflation has slowed, leading to debates about its causes, with conservatives blaming government spending and progressives pointing to corporate profits. Despite rising prices, foreclosures and bankruptcies are still below pre-pandemic levels, and unemployment remains low at 4.3%.
The Federal Reserve is expected to lower interest rates soon due to the cooling inflation and the economy’s ability to avoid mass layoffs, which was once thought near impossible. Factors such as minimum wage increases, economic policies maintaining full employment, and government spending have allowed Americans to maintain their purchasing power and outpace inflation.
While corporate profits are at record highs, labor’s share of business income is at record lows, indicating that companies could afford to pay their workers better. There is room for wages to rise further, allowing workers to regain some of the share of income that has gone to profits. Overall, the economy has shown resilience and the potential for continued improvement in workers’ wages.
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