Along with the national and regional statistics economy-trackers follow, I find it useful in my travels to talk to people on the ground. If you want a general feel for the local economy, ask around and—discounting for the non-random, convenience sample—you can often get a pretty good idea.
The sense I get from folks is that while they sense that things are getting a bit better and they’re more hopeful than they were in the recent past, they’re not quite feelin’ the love. Higher gas prices are definitely a big part of the mix—cabbies are overweighted in my sample—but a lot of folks feel like the recovery hasn’t quite reached them yet.
I think this is one of the reasons: it’s a plot of the annual percent change in real weekly earnings, net of any non-wage benefits. Take out taxes (and add in the payroll tax cut) and this is what’s happening to real paychecks.
And, as you can see, they aren’t going as far they were a year ago. As the table below shows, that’s largely a function of faster inflation. The table decomposes the growth in weekly earnings into three parts: inflation (which subtracts from real wage growth), hours’ growth, and hourly wage growth.
Hours continue to grow as the expansion gains pace, but they’ve decelerated a bit. The nominal hourly wage has been trucking along at around 2%. But faster price growth is sucking more out of your paycheck’s buying power than it was a year back.
Obviously, the gas price spike is a big part of the story, but it’s also the case that 8.3% unemployment is a signal of a slack labor market. And in slack labor markets, there’s little pressure on hourly wage growth.
So if things don’t feel that great to a lot of working people right now, there’s a reason: they’re still struggling.