Putting the final touches on my quarterly RWM client call, I wanted to share a chart that is surprising to many people. The above shows changes in the BLS Average Hourly Earnings and Consumer Price Index since the Pandemic blew up in February 2020.

What seems to surprise people: On average, U.S. wages have outpaced inflation since 2020.1

What are the key drivers here? Two big things stand out:

Fiscal Stimulus: At nearly $2 trillion, CARES Act I was the largest fiscal spend as a percentage of GDP (about 10%) since World War Two. CARES Act II was another $800 billion;  CARES Act III was nearly 1.8 trillion (I and II under Trump, III under Biden).

These dumped a ton of cash into the economy all at once in 2020 and 2021. CPI inflation peaked in June 2022, as most of the pig was through the python by then.


Keep reading this article on Barry Ritholtz - The Big Picture.

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