- The cost of living in the U.S. is rising at its fastest rate in 10 years, according to new data from the Labor Department.
- Consumer prices increased 2.9 percent in July from the year before, meaning Americans may be earning less than they did at this time last year.
- The lack of real wage gains comes despite a strong economy, with sustained growth and an unemployment rate of 3.9% — one of the lowest levels in decades.
Well, the tax cuts worked, for corporations that is. American consumers are taking home less money because of higher gas prices, the rise in housing costs and price increases of consumer goods due to the tariffs.
When inflation rises faster than wages, workers fall behind. They have to cut costs from their budgets, take on debt or put in more hours to try to live the same lifestyle they had enjoyed a year ago. The Labor Department reported that Americans are putting in more time on the job this summer versus last summer, which is helping to keep family earnings about the same for now.
Consumers are also paying more for housing, health care and automobile insurance, the federal government reported Friday. Additional price increases could be coming as President Trump’s new tariffs boost the prices of cheap imported products on which U.S. consumers rely. And many economists warn that growth might have peaked for this expansion.
Thus far, however, [inlinetweet prefix=”” tweeter=”” suffix=””]most benefits of the strong economy appear to have gone to high-paid workers, stock market investors and corporations.[/inlinetweet] Middle America is being left behind.
Some estimate that the frustration stretches back even further. Pew Research wrote in a report this week that, [inlinetweet prefix=”” tweeter=”” suffix=””]“despite some ups and downs over the past several decades, today’s real average wage has about the same purchasing power it did 40 years ago.”[/inlinetweet]
Here comes the ripple..
Brands should be prepared for the ripple of workers left behind. Eventually people are going to cut back their spending. It’s likely to come from weekly shopping trips to the grocery store as well as eating out. Brands that don’t communicate “value” or help consumers feel good about themselves are going to feel the pinch.