Americans’ buying power rose for first time since March 2021 amid falling inflation
Workers saw their buying power grow in May for the first time in two years, as inflation continues to fall from its pandemic-era peak.
If the trend continues, it'd be welcome news for households, who could lean more on their paychecks instead of their savings or credit cards to support everyday spending, economists said.
«Real» hourly earnings increased by 0.2%, on average, this May versus May 2022, according to the U.S. Bureau of Labor Statistics.
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Real earnings represent an average worker's annual wage growth after accounting for increased costs for household goods and services, as measured by the consumer price index, or CPI.
A positive number means the average worker experienced an increase in their standard of living. A negative number means the opposite: that salaries can't buy as much as they did a year ago.
May's figure was the first positive annual reading since March 2021, according to BLS data. Before the latest reading, workers had endured 25 consecutive months of eroding buying power, the longest stretch on record, said Aaron Terrazas, chief economist at Glassdoor, a career site.
«This is clearly a function of inflation starting to come down,» Terrazas said.
«Real wages turned positive, and that's great,» he added. «But many [people] are just playing catchup up for what's happened over the past two years.»
Wage growth started to spike in 2021 as workers enjoyed the benefits of a hot job market. Businesses' demand for workers jumped to record highs as the U.S. economy reopened broadly after its pandemic-induced lull.
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