EJ Anthony write:
Today’s employment data shows additional earnings growth, but cumulative price increases over the past four years still far outpaced earnings growth.
According to the household budget index, this is especially true when considering only the prices of essential items such as groceries and housing.
Again, I cannot verify Dr. Anthony’s conclusions. I use FRED’s AHETPI series for all production and non-managerial workers. Recalling the CPI then, in part because it is the Laspeyres index, tends to overestimate inflation (although to a lesser extent over time). I use a variety of deflators to deflate.
Figure 1: Average hourly earnings of private sector production and non-management workers scaled by CPI-U (blue), serial CPI (tan), PCE deflator – market-based (green), and AIER daily price index (red) as of 2021M01$. November CPI contraction wages use Cleveland Fed y/y as of December 7, 2024. Chained CPI seasonally adjusted by the author using X-13. Source: BEA, Cleveland Fed, AIER and author calculations via BLS, FRED.
Dr. Antoni focused on Primerica HBI to support his argument. I rely on the American Institute for Economic Research (AIER)’s “Everyday Price Index,” which has the same purpose of covering daily necessities. Using this indicator, we can see that actual average hourly earnings are much higher than using CPI-U.