Economics

We find that all four measures of typical and aggregate pay, adjusted by PCE, have grown since 2019. When deflating using CPI, we find smaller increases across three of the four measures and a decline in one measure. In other words, nominal pay by these measures has done relatively well in keeping up with overall costs of living since 2019, measured by PCE. Nominal pay has done somewhat less well in keeping up with increases in the costs of goods and services that are much more salient to consumers, measured by CPI. This pattern is consistent across time periods, with pay deflated by CPI experiencing smaller increases—or instead decreases—relative to pay deflated using PCE.

Further, using PCE inflation, there have been gains in real pay across measures relative to the fourth quarter of 2021. Since the fourth quarter of 2022, deflating by either inflation measure shows gains in real pay. Finally, since the fourth quarter of 2023, real pay grew as measured by Average Hourly Earnings, the Employment Cost Index (ECI), and Total Compensation as reported in the National Income and Product Accounts. Real pay as measured by Median Weekly Earnings fell sharply, reversing an almost equally sharp increase in the previous quarter.