While there is a great deal of debate about whether Americans are better off financially since the Great Recession, part of the argument is based on government data.
The U.S. Bureau of Labor Statistics released income data for the first quarter of 2018 recently:
Median weekly earnings of the nation’s 113.4 million full-time wage and salary workers were $881 in the first quarter of 2018 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported today. This was 1.8 percent higher than a year earlier, compared with a gain of 2.2 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period
By this measure, Americans have made huge progress. In the first quarter of 2009, the comparable figure was $732.
The median weekly data, however, look very different when calculated in constant dollars (1982-1984). In this case, the number for Q1 2009 is $345. For the first quarter of this year, the number is $350. Over the period, the quarterly figure never topped $353, which it hit in Q2 and Q3 last year.
Wages are central to the debate about how the economy has recovered, how quickly it could fall into recession again, and the consumer spending portion of GDP. Roughly two-thirds of GDP is based on consumer spending.
One argument that consumer spending is not and will not be a problem is that from 2009 to the present, prices for most things have risen very little. Essentially, there has been muted inflation. That has started to change recently, particularly in terms of oil and gas, and to a lesser extent food. Oil and gas prices have spiked in the last several months, and the price of gas is at a multi-year high.
Another year of stagnant wages may be the largest drag on the economy, particularly if the cost of living spikes in the second half of the year.