Former President Donald J. Trump wants to “make America rich again.” That was the theme of the first day of the Republican National Convention. Economic policy, inflation, regulation and trade deals were the focus of Monday’s speeches, according to the GOP.
Is the payment in line with inflation? Are Americans on a Path to Getting Richer? Here’s what we found:
The average hourly wage of employees increased in June compared to a year ago. The Bureau of Labor Statistics found that wages rose 3.9% between June 2023 and June 2024, faster than the rate of inflation. Although the news is good for workers, many Americans are still feeling the burden of rising living costs.
Wages outpace inflation
The Consumer Price Index, a measure of the change in the price of goods and services, has risen 20.8% since the start of the pandemic, according to the Bureau of Labor Statistics. During the same time period, average hourly earnings increased by 22.3%.
“We had this period where inflation rose faster than wages, and what we’ve had in the last year or so is we’ve seen wages rise faster than inflation,” said Gerald Cohen, a professor and chief economist at Frank H. .Kenan Institute of Private Enterprise at the University of North Carolina.
It’s normal for prices to rise throughout the U.S. economy every year: A small amount of inflation is a sign of a healthy economy, Bankrate reported. Small amounts of inflation can help businesses grow through employment and rising consumer wages.
The Fed currently targets an annual inflation rate of 2%.
CPI report:Inflation slowed more than expected in June as gas prices fell, rents rose
Are wage increases covering the rising costs of living?
A survey by Bankrate found that between October 2022 and the end of October 2023:
- Nearly 66% of Americans experienced a pay raise at some point
- About 38% said they received a raise
- 16% found a better paying job
“Different people have had different experiences,” Cohen said. Households in the bottom 20% income group spend more on housing and groceries and may have had wage increases, he said, but “they felt higher inflation more because their spending basket is weighted toward things that have increased in price the most.”
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Only one-third of workers surveyed who had a pay raise reported that their income kept up with, or exceeded, increases in their household expenses due to inflation.
People who work in retail and the food service industry are particularly vulnerable to feeling the effects of inflation, experts say.
Trump’s popularity and the ‘potential impact’ of the economic plan
Despite recent gains, the real incomes of the bottom 90% of Americans — those earning less than $216,056 a year in 2023 — have “largely stagnated since the early 1970s,” Jesús Fernández-Villaverde, professor of economics and director of the Penn Initiative for the Study of Markets at the University of Pennsylvania, USA TODAY said.
That economic gap is reflected in Trump’s popularity being higher among those in the bottom 90% of earners than among those in the top 10%, he said.
“A walk through any affluent suburb of New York City, Chicago, Boston or Philadelphia will reveal a sea of ​​anti-Trump yard signs (my suburb of Haverford outside Philadelphia),” Fernández-Villaverde said. “In contrast, a walk through a lower-middle-class suburb in the same city (south of Havertown) will identify dozens of Trump blue flags.”
However, he questions whether Trump’s economic plans will actually boost the economy. Since there is some evidence that immigration hurts those in the bottom 90% of income earners, tougher immigration restrictions “will probably help the incomes of the bottom 90%,” he said.
Other ideas, like banning outsourcing, would probably hurt most Americans, Fernández-Villaverde said. And there are only “small references” to the biggest challenges of the US economy, such as improving the education of workers and creating a “modern vocational education system,” he said.
Also, “there is no attempt to explain how to get the US federal budget back on track,” Fernández-Villaverde said. “So, unfortunately, I’m somewhat unimpressed by the document and its potential positive impact.”
Are Americans rich? By some measures
By some measures, the US is as rich as it has ever been. US household wealth surpassed $160 trillion in the first three months of 2024, a new record, according to data from the Federal Reserve. The growth has been driven by factors including rising stock and real estate values.
When the data comes out, household wealth for the April-June 2024 period is likely to be even higher than that, Cohen said.
The median net worth of American households rose 37% from 2019 to 2022 to $192,900, adjusted for inflation — the largest increase in the history of the Fed’s Survey of Consumer Finances, conducted every three years and released in October 2023.
Another measure is the wealth of American households relative to their income. Currently, the average household’s wealth is more than seven times their income. That’s just below the peak household wealth of eight times earnings in the first quarter of 2022, Cohen said.
“The equity markets went down and then we’ve seen earnings continue to rise,” he said. However, the current number is “extremely high relative to history.”
But wealth and income are distributed differently around the population. So a message to make America rich may come across differently depending on the person’s experience.
“People say, ‘prices haven’t come down,'” Cohen said. “If incomes continue to grow faster than inflation, then that sting will probably hurt less.”
Contributed by: Paul Davidson
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Image Source : www.usatoday.com
