Wages And Inflation Rise

Wages are up 4.5% in the US! Inflation is up 7.9%. Oops. Accounting for both, real wages are down 2.6%. Sigh. Economics rarely is determined by one factor; but the last two years have been disrupted by the various aspects of the pandemic. Government stimulus packages, the Great Resignation, and supply chain disruptions are temporary effects that aren’t academic. Temporary doesn’t mean much when it hurts too much. Of course, wages going up helps moderate the effect of inflation, but wage growth can also contribute to inflation. Economics isn’t easy. Older people can remember double-digit inflation and interest rates, but for many, today’s numbers represent a record high. One response from companies is to further emphasize automation which disconnects wages from corporate expenses. These numbers and trends were significant enough, and now the world has a new significant war affecting food and energy prices. The New Normal may be delayed, or at least redefined before we even got to see what it might have been.