Americans have kept spending despite more than five years of higher prices. But the paychecks that have powered that spending are starting to lose steam. Friday’s jobs report could show how much further pay gains are falling behind inflation. The continued resilience of spending, which powers two-thirds of US economic growth, has been attributed to several reasons – mostly gains in wealth, but also demographics, post-pandemic savings, inflation effects, and a robust stock market – but a crucial factor has been the relative stability of the labor market. “Having a job enables confidence to keep spending despite inflation headwinds,” Kathy Bostjancic, chief economist at Nationwide, noted on Wednesday.
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