August 14, 2018
No, I’m not being a Trump cheerleader, I am just looking at the numbers. This piece in the Washington Post noted the lack of real wage growth and indicated the future prospects were dubious.
The year-over-year rate of inflation was 2.9 percent in July, slightly exceeding the 2.7 percent rate of growth in the average hourly wage. However, this figure was inflated by jumps in oil prices last August and September. In the next two months, these jumps fall out of the 12-month window.
If we assume that inflation will be 0.2 percent in each of the next two months, and the 12-month rate of growth of nominal wages remains at 2.7 percent, year-over-year real wage growth will be very slightly positive next month and will be 0.3 percent in September. That is hardly great wage growth, but it is positive. That is not much for Trump to brag about, but it would be wrong to say that real wages are stagnant.
It is also worth noting that the 3.1 percent growth rate projected for 2018 by the Congressional Budget Office (CBO), which is the headline of the piece, is the same growth rate it projected in the Budget and Economic Outlook released in April. People reading the piece may wrongly conclude that CBO had revised its projection upward.
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