INFLATION BEATS OUT WAGES

U.S. wages rose 5.5 percent in April, year over year, while inflation sped at an annual rate of 8.5 percent during the 12 months ending 31 March, the U.S. labor department reported.

In contrast, wages grew by an average of 3.4 percent in the six months preceding the COVID onset in February 2020.

Rising wages are a key driver of inflation, because employers often must raise product prices to cover higher labor costs.

However, there are signs the surge in wages may be easing. 

April’s gain was just 0.3 percent from March; February’s increase was 0.1 percent, as we reported in “Wage Growth Slows” (5 Apr 2022). The two months showed the slowest wage gains in the last eight.

Also, the U.S. economy has sprouted an average of 552,000 jobs each month for the last eight and the labor force participation rate was 62.2 percent in April, up from 61.7 at the depth of the COVID War.

Those figures indicate that higher wages have drawn more workers off the sidelines and back to the workplace, which could ease wage growth, The Wall Street Journal said.

TREND FORECAST: As we noted in “Wage Growth Slows as Inflation Speeds Up” (8 Mar 2022), the Ukraine war will accelerate inflation even faster, widening the distance between prices and households’ purchasing power. 

The implications are enormous, from prospects for recession, Dragflation, and depression to political, corporate, and supply chain upheaval to individuals’ mental health and family dissolution.