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Wages Inflation-Adjusted, Continues to Fall – Biden Economy Smoke and Mirrors?

Personal income from all sources, including wages, salaries, interest dividends, rental income, unemployment, Social Security, etc. rose by 0.4% in November. Year on year, personal income is up a healthy 7.4%, according to the latest data from the Bureau of Economic Analysis today. Keep in mind a chunk of this yearly gain came from government stimulus.

But when you adjust for the worst inflation in 40 years, real income actually fell last month. That means you have more dollars, but you can’t buy as much with them. It was the fourth straight monthly decline in real income. Compared to a year ago, real income from all sources was up by only 1.6%.

Pulling out all of the government money, compensation from wages and salaries in November rose by 0.5% for the month. But when adjusted for inflation, total compensation fell by 0.2% in November. See this in the following series of charts, both personal and household wages, when adjusted for inflation – learn more here.

US Consumer PCE 2021-12-23

On a household basis, things get even worse. Household wages and salaries were only up 0.1% month-on-month. Inflation-adjusted, household wages and salaries tanked by 0.6%. Year-over-year, household wages, and salaries are down 0.2% adjusted for inflation and they fell by a whopping 1.4% from two years ago.

US Consumer PCE Household 2021-12-23The reality is even worse. These numbers are based on a government-rigged Consumer Price IndexUsing an honest CPI, total real income is down somewhere in the neighborhood of 7.6%. In a nutshell, Americans won’t be able to outrun the inflation dragon.

California’s largest businesses will be required to pay workers a minimum of $15 an hour in January 2021. Next year, 26 U.S. states and Washington will raise their minimum wages. However, many workers will see more substantial pay increases because their employers chose to raise their pay floor on their own.

President Biden signed an executive order yesterday authorizing an across-the-board pay increase of 2.2% as well as a roughly 0.5% locality pay boost for government workers in 2022. Overall, civil servants will have an average pay increase of 2.7%. But this is far under what the market is giving out to private workers. The Biden pay increases amount to a pay cut when factoring in inflation.

All these wage hikes sound good – correct?

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Yes, people will see a bigger wage number on the bottom of their paycheck. Biden and many pro-Democrat pundits will tout this data point. But this is all smoke and mirrors as they will never say the reality that in fact, it is just the opposite to what they say. Adjusted for inflation, wages and standards of living are on the decline. But, see below what President Biden is saying on how he is doing with the economy.

If you happen to be somebody living on a fixed income or savings, you’re really going to get hurt, as inflation is rapidly eating away your purchasing power and your income streams aren’t increasing at all. Inflation always causes the most pain for the poor and elderly. The inflationary effects on retirees could very well amount to a 20 to 50% reduction in the standard of living over the next few years.

Now that the inflation dragon has been released, we could see this wage and price spiral being planned, accelerating this inflationary phenomenon. But don’t worry more government stimulus, government fiscal deficits, and easy Fed money will be on the way. These will only add to the problem. They may have no choice but to do this, in order to stave off a significant recession – or worse. However, the longer you wait to take the financial medicine to correct, the worse the medicine will be when taken – politicians and policymakers are merely “kicking the can down the road.”

Yes, the rich are getting richer and the poor are getting poorer. All through the magic of the Biden administration’s economic smoke and mirrors. Don’t be fooled about the truth as we enter 2022.

See more #chartoftheday posts.

 RWR original article syndication source.