Inflation has been eating up wage gains for months. September was no different.
Inflation continues to erode wage gains, leaving September no different as average hourly earnings increased by an anemic 0.1 percent from August and 3 percent year over year. This unexpected cooling in wage growth marks the slowest pace since 2021, shaking rate-hike expectations and posing a direct threat to consumer spending. Meanwhile, soaring energy prices and falling real wages evoke comparisons to the 1970s economy. In a labor market characterized by minimal hiring and firing, workers are also facing fewer raises, compounding financial pressures.
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- ✓ Average hourly earnings rose 0.1% from August and are up 3% year over year.
- ✓ Wages are rising at the slowest pace since 2021.
What changed
September wage growth slowed to its lowest pace since 2021, posting an anemic 0.1 percent monthly gain and shaking previous rate-hike expectations.
Live updates
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Inflation and Cooling Wage Growth Strain Consumer Spending
Inflation continues to erode wage gains, leaving September no different as average hourly earnings increased by an anemic 0.1 percent from August and 3 percent year over year. This unexpected cooling in wage growth marks the slowest pace since 2021, shaking rate-hike expectations and posing a direct threat to consumer spending. Meanwhile, soaring energy prices and falling real wages evoke comparisons to the 1970s economy. In a labor market characterized by minimal hiring and firing, workers are also facing fewer raises, compounding financial pressures.
Why it matters
The recent data highlights a deteriorating purchasing power dynamic for households as wage growth fails to keep pace with cost-of-living increases. Slower wage gains complicate monetary policy decisions by altering market expectations around interest rate hikes. Analysts note that stagnant income growth combined with persistent inflation risks dragging down broader consumer spending.
What is confirmed
- Average hourly earnings rose 0.1% from August and are up 3% year over year.
- Wages are rising at the slowest pace since 2021.
Still unconfirmed
- The current economic conditions are beginning to look like the 1970s due to falling wages, soaring energy prices, and inflation.
What to watch next
- Future inflation reports
- Subsequent Federal Reserve rate decisions
- Consumer spending data updates
confidence 100%Sources used for this update (13)
- Yahoo Finance — Inflation has been eating up wage gains for months. September was no different.
- MarketWatch — Opinion: Falling wages, soaring energy prices and inflation: It’s beginning to look a lot like the 1970s
- Barron's — Inflation Eats Away at Wages, Posing Risk to Consumer Spending
- TipRanks — Wage Growth Suddenly Cools, Shaking Rate-Hike Expectations
- WSJ — Wages Are Rising at the Slowest Pace Since 2021
- newrepublic.com — Eric Schmitt’s a Joke. The Assaults on Jack Smith Are Anything But. | The New Republic
- finance.yahoo.com — Stock market today: Dow, S&P 500, Nasdaq futures rise ahead of key jobs report as oil steadies
- Investopedia — The ‘No Hiring, No Firing’ Job Market Now Means Fewer Raises, Too
- Barron's — Wage Growth Disappoints
- thespinoff.co.nz — Why the forecasters got it so wrong on the Covid unemployment rate | The Spinoff
- t2conline.com — Google and Gemini App
- finance.yahoo.com — Inflation has been eating up wage gains for months. September was no different.
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