The national job creation machine roared ahead in March. The U.S. economy aded 431,000 jobs. The official unemployment rate fell to a Pandemic low of 3.6 percent. This is the 11th consecutive month in which the economy added 400,000 or more jobs.
The economy has recovered 93% of the 22 million jobs lost in the Pandemic.
But despite the strength of the job creation market, workers didn’t see much upward movement in their paychecks.
Average hourly wages for private-sector workers, rose by 13 cents to $31.73 in March. My calculator says that’s a 0.4% increase.
Wages have now climbed by 5.6% in the last year.
Which sounds OK–until you add that inflation is up 7.9% in the period.
So in the midst of one of the greatest job creation binges on record, workers have seen their buying power reduced over the last year.
Part of that wage problem, I’d speculate, is that the hospitality sector–you know restaurants and the like–is responsible for a high proportion of the job gains and that sector isn’t know for its high wages. Which might be dragging down the average for the recovery.
But forget about the inversion of the Treasury yield curve or the war in Ukraine. If you’re looking for a reason to worry about the chance of a potential Recession, don’t search any further. If wage-earners aren’t keeping up with inflation and are, in fact, seeing their buying power erode, it’s hard to see them providing the kind of growth in consumer buying that powers an economy higher. And it’s very easy to see why consumers who are seeing their buying power fall might decide to cut back on spending and save more because the future looks uncertain. And that, folks, is what leads to a Recession
