Dramatic shift comes after more than two years of high rates helped tame inflation but that also made borrowing painfully expensive for American consumers
Inflation is the overall increase in prices. If I inflate a tire at 10 PSI/sec and then I slow the inflation to 5 PSI/sec, the tire is still inflating. Saying prices have not fallen is a given since that has not really happened since the Great Depression. If the Fed kept interest rates high despite lowering inflation we eventually would have gotten deflation which is something we absolutely, positively do not want. Wage increases have outpaced price inflation since early 2023. Inflation was greater than wage growth in 2021 and 2022 so your experience sucks but it doesn’t seem to be the norm.
That data is made of averages which aren’t worth a lot when you discuss people’s feelings about the economy, and also not everyone is getting a raise equally. Many don’t get one at all and those people are definitely still dealing with prices being higher.
Additionally, the cumulative rate of inflation over the last four years is over 20%, so unless my annual salary rises to be at least that much higer than it was four years ago then my real buying power has still decreased. It doesn’t matter that the average raise is outpacing inflation if I never receive enough raises to at least keep up.
States with laws that are hostile to workers - as mine is - make it hard to find employment where your employer will increase your pay to at least track inflation. This kind of thing gets lost in the discussion of averages.
Just because a person might have a wealthy neighbor while they live in poverty doesn’t really mean that, on average, everyone is doing fine. It still means some are still hurting.
From the article:
Though the central bank now believes inflation is largely defeated, many Americans remain upset with still-high prices for groceries, gas, rent and other necessities.
The comment on this article that you were originally responding to was most certainly one of frustration with this situation, not one aimed at the Fed’s decisions about interest rates. I feel that frustration too.
It kinda doesn’t matter if the Fed made every single right move if this was still the outcome for a large swath of America. People are going to be voicing frustration every time an article about the economy is posted.
Sorry. Didn’t mean to sound condescending. When people say inflation may be low but prices are up generally means they think prices usually just fluctuate around a set number. As someone who also has a degree in economics, I tend to jump to informing people on what inflation is and who is on charge of dealing with it.
As for wages, those were indeed average increases which are not always or even usually the same as median. I do recall reading that median wages had finally gotten higher than pre-COVID levels a couple months ago adjusted for inflation. I’d provide a source but I’m currently at a children’s birthday party and don’t have great access to info at the moment.
YMMV depending on your state and region of course but most people are doing better than they were four years ago.
Inflation is the overall increase in prices. If I inflate a tire at 10 PSI/sec and then I slow the inflation to 5 PSI/sec, the tire is still inflating. Saying prices have not fallen is a given since that has not really happened since the Great Depression. If the Fed kept interest rates high despite lowering inflation we eventually would have gotten deflation which is something we absolutely, positively do not want. Wage increases have outpaced price inflation since early 2023. Inflation was greater than wage growth in 2021 and 2022 so your experience sucks but it doesn’t seem to be the norm.
That data is made of averages which aren’t worth a lot when you discuss people’s feelings about the economy, and also not everyone is getting a raise equally. Many don’t get one at all and those people are definitely still dealing with prices being higher.
Additionally, the cumulative rate of inflation over the last four years is over 20%, so unless my annual salary rises to be at least that much higer than it was four years ago then my real buying power has still decreased. It doesn’t matter that the average raise is outpacing inflation if I never receive enough raises to at least keep up.
States with laws that are hostile to workers - as mine is - make it hard to find employment where your employer will increase your pay to at least track inflation. This kind of thing gets lost in the discussion of averages.
Just because a person might have a wealthy neighbor while they live in poverty doesn’t really mean that, on average, everyone is doing fine. It still means some are still hurting.
From the article:
The comment on this article that you were originally responding to was most certainly one of frustration with this situation, not one aimed at the Fed’s decisions about interest rates. I feel that frustration too.
It kinda doesn’t matter if the Fed made every single right move if this was still the outcome for a large swath of America. People are going to be voicing frustration every time an article about the economy is posted.
I have an B.S. in Economics, by the way.
Sorry. Didn’t mean to sound condescending. When people say inflation may be low but prices are up generally means they think prices usually just fluctuate around a set number. As someone who also has a degree in economics, I tend to jump to informing people on what inflation is and who is on charge of dealing with it.
As for wages, those were indeed average increases which are not always or even usually the same as median. I do recall reading that median wages had finally gotten higher than pre-COVID levels a couple months ago adjusted for inflation. I’d provide a source but I’m currently at a children’s birthday party and don’t have great access to info at the moment.
YMMV depending on your state and region of course but most people are doing better than they were four years ago.