Over the past few years, median weekly earnings in the United States have increased by 24%, outpacing the inflation rate by 2.3%. However, wage gains have not been evenly distributed, with blue-collar workers experiencing a higher increase in earnings compared to white-collar professionals. Despite this, consumer confidence remains below pre-pandemic levels, leading to a “vibecession” where the economy appears solid, but public perception is downbeat.
The increase in inflation has sparked debate about its causes, with conservatives blaming government spending and progressives pointing fingers at corporate profits. Vice President Kamala Harris has proposed measures to prevent “price gouging” of groceries to alleviate the financial pressure on households. However, economists attribute much of the inflation to supply-chain shocks during the pandemic.
Despite rising prices, the typical American household has managed to weather the storm, with foreclosures and bankruptcies below pre-pandemic levels. Unemployment remains low at 4.3%, and the Federal Reserve is looking to lower interest rates to maintain a “soft landing” for the economy. Many economists credit factors such as increased minimum wages and government spending for sustaining Americans’ purchasing power.
Companies have seen record profits and high stock market indexes, but labor’s share of business income remains low. According to an analysis by the Economic Policy Institute, there is room for wages to rise further while still maintaining healthy profit margins. Overall, the economy has shown resilience despite inflationary pressures, providing hope for continued growth and stability.
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