(What’s Left of) Our Economy: Americans’ Real Wages Keep Sinking

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CCP Virus, China, consumer price index, coronavirus, cost of living, COVID 19, CPI, energy, food, inflation, inflation-adjusted wages, living costs, lockdowns, private sector, real wages, Russia, sanctions, supply chains, Ukraine, Ukraine invasion, Ukraine-Russia war, wages, Wuhan virus, zero covid policy, {What's Left of) Our Economy

Last Thursday’s news coverage of U.S. inflation rates (as measured by the Labor Department’s Consumer Price Index, or CPI) rightly emphasized that the February headline figure hit its highest annual rate in 40 years. What such reports seem to have missed is something at least as important, especially for understanding why the American public seems so angry about these price hikes despite lots of other strong economic indicators.

Specifically, the same day the Labor Department released the new CPI numbers, it also posted data showing that after adjusting for inflation, wages for many major categories of U.S. workers saw their greatest drops in several months and in some cases longer than that. And much of the news was especially bad in manufacturing.

To start with the broadest grouping, in February, hourly pay for the average private sector worker fell on month by 0.80 percent, the worst such performance since the 1.72 percent decrease in June, 2020, early during the recovery from the CCP Virus’ first wave. (As known by RealityChek regulars, the Labor Department doesn’t track wages for government workers because those pay levels are mainly set by politicians’ decisions, and therefore say little about the fundamental state of the nation’s labor market or broader economy.)

For private sector production and nonsupervisory workers (who are often called blue-collar workers), the 0.86 real wage decline they experienced was also the worst since June, 2020 (1.30 percent).

On an annual basis, after-inflation wages in February sank for all private sector workers by 2.63 percent – the fastest pace since last May’s 2.67 percent. And for the blue-collar subset, they’re off by 1.93 percent – also the most since last May (2.69 percent).

Throughout manufacturing, these inflation-adjusted wages took major hits, too. For all workers in the sector, such pay dropped by 1.29 percent between January and February – the biggest falloff since May, 2020’s 1.76 percent. For industry’s blue-collar employees, they tumbled by 0.57 percent – the steepest since June, 2020’s 1.31 percent.

Much worse for manufacturing wages were the February year-on-year results. For manufacturing as a whole, they were down in after-inflation terms by 3.43 percent – the greatest decline since April, 2021’s 3.85 percent.

But the real stunner came for the production and nonsupervisory group. The 3.41 percent annual retreat in their real wages was the worst in more than 41 years – going back to July, 1980’s 3.90 percent.

And especially discouraging – with further price hikes in energy (and all the products and services that depend on it) and food seemingly certain because Russia’s invasion of Ukraine has disrupted global markets and supply chains anew, inflation-adjusted wages also seem likely to keep falling. The news that China has just locked down two big industrial cities in an attempt to fight a CCP Virus surge with its Zero Covid policy won’t help, either.

It’s true, as President Biden and his supporters keep noting, that growth is still strong, and that unemployment is way down.  But the former understandably can seem abstract, and high inflation means that even recent job gainers can’t be faulted for feeling that they’re falling behind economically despite paychecks resuming.  

 

(What’s Left of) Our Economy: U.S. Real Wage Decline is Really Widespread

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CCP Virus, child care, coronavirus, COVID 19, elder care, health care, inflation adjusted wages, labor shortages, nursing, real wages, supply chain, trucking, wages, warehousing, workers, Wuhan virus, {What's Left of) Our Economy

A Facebook exchange I was involved in last night prompted me to check the U.S. government data to find out how widespread was the trend of falling real wages – and by definition falling living standards. And the answer is: incredibly widespread – including in supply chain-related sectors where crippling labor shortages are often blamed for much of the bottleneck problem that has helped fuel inflation by reducing the supply of goods sought by Americans.

The exchange began when a Facebook friend posted her view that the U.S. economy was doing far better than gloomy press reports indicated. I countered with my “putting people first” argument that falling living standards meant that the economy was failing in its fundamental mission: improving Americans’ material lives. My interlocutor responded by claiming that the unusually large number of unfilled job openings have appeared during the stop-and-start recovery from the brief but steep CCP Virus-induced downturn showed that many Americans falling behind economically could easily improve their lot by taking jobs in higher paying industries.

I could have answered by pointing out how many Americans in low-paying jobs in particular lack the training to move that wage ladder. But I was more struck by the pervasiveness of the recent decline in inflation-adjusted hourly pay – which shows that even those able to make that transition will find themselves on a downward moving escalator for the time being.

Specifically, I looked at price-adjusted wage trends on a November, 2020-November, 2021 basis for the eight broadest categories tracked by the Bureau of Labo Statistics (BLS). They are: mining and logging; construction; manufacturing; trade, transportation and utilities; information services; professional and business services; leisure and hospitality; and miscellaneous services.

How many of these eight sectors saw real wage declines between the two Novembers? Seven. Leisure and hospitality was the lone exception, and it’s the lowest paying of these categories by far. The constant dollar wage out-performance there was indeed encouraging, but with these hourly earnings still only standing at $6.88 in 1982-84 dollars – versus $11.13 for the private sector as a whole – I wouldn’t claim economic success just yet.

(As known by RealityChek regulars, BLS doesn’t monitor wages in the public sector because there, pay is determined mainly by politicians’ decisions, not economic fundamentals.)

The names of these eight sectors, however, make clear that they’re so broad that they could include subsectors where the story’s very different. And that’s true even for a number of what might be called pandemic-specific sectors with lots of job openings – but only sometimes.

For example, the enormous national healthcare sector is part of the business and professional services grouping, where real hourly wages of $13.44 – higher than the private sector average – are off by a little over one percent so far this year. But for healthcare alone, they’re up by just under one percent (to a lower $12.13, though).

Dig deeper, and you find that after-inflation wages for hospitals, nursing care facilities, elder care facilities, and child care services, have risen, too. But except for hospital workers (a broad, relatively high paying category itself), hourly wages in 1982-84 dollars in none of these sectors is anywhere close to even a measly $10. And none has seen year-on-year wage increases of more than 1.95 percent (for hospital workers).

The wage situation is even worse in many of the supply chain-related industries within the trade, transportation, and utilities super-sector. For example, next time you hear about a dire nation-wide shortage of truck drivers, keep in mind that their real wages have decreased by 3.67 percent annually as of November. And workers at those equally strained warehouses? They’re only off by 0.25 percent. But they’re supposed to be desperate to hire! What gives?

The most obvious answer to me is that a supposed labor shortage in a sector where real wages are decreasing is really a tale of inadequate pay. But that’s a subject for another post – or six. For today, though, it seems abundantly clear that the headline real wage decline number isn’t masking lots of workers gaining ground, and that if you view that standard as the main test of an economy’s success, America’s is definitely flunking.

(What’s Left of) Our Economy: The Case for Inflation Optimism Survives!

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consumer price index, core inflation, CPI, Federal Reserve, inflation, inflation-adjusted wages, Jerome Powell, Labor Department, real wages, stimulus, transitory, {What's Left of) Our Economy

Call me a cockeyed optimist, but today’s official U.S inflation figures (for November) still leave me uncertain as to how lasting recent strong price increases are going to be. One obvious (at least to me) reason: Whereas the release of the October Consumer Price Index (CPI) figures showed major month-to-month acceleration of inflation, the November results show some easing.

That’s the case, moreover, both for the overall inflation numbers and for so-called core inflation, which strips out food and energy prices supposedly because they can be volatile for reasons unrelated to the economy’s overal prone-ness to inflation (like bad weather or the policies of foreign cartels).

Acceleration was still displayed by the annual results for both inflation gauges. But the speedup between October and November was somewhat slower than that between September and October. And here we get to the second reason for my continued (though tempered) optimism: This year-on-year pickup still looks partly due to baseline effects created by the unusually weak price increases of last year, when the CCP Virus pandemic was holding back economic activity more than this year. In other words, inflation may still be playing catch-up, and even more frustrating, this kind of distortion could affect the inflation figures for a few more months.

So let’s take a look at the data to see the basis for my arguments. First, this year’s monthly increases in overall inflation:

Dec-Jan:                          0.26 percent

Jan-Feb:                          0.35 percent

Feb-March:                     0.62 percent

March-April:                  0.77 percent

April-May:                     0.64 percent

May-June:                      0.90 percent

June-July:                      0.47 percent

July-Aug:                      0.27 percent

Aug-Sept:                     0.41 percent

Sept-Oct:                      0.94 percent

Oct.-Nov:                     0.78 percent

As is clear, the November rise is still high, but it’s down not trivially from October’s rate – which was the fastest since June, 2008’s 1.05 percent.

The same pattern is apparent for core inflation:

Dec-Jan:                       0.03 percent

Jan-Feb:                       0.10 percent

Feb-March:                  0.34 percent

March-April:                0.92 percent

April-May:                   0.74 percent

May-June:                    0.88 percent

June-July:                     0.33 percent

July-Aug:                     0.10 percent

Aug-Sept:                    0.24 percent

Sept-Oct:                     0.60 percent

Oct-Nov:                     0.53 percent

As mentioned, the year-on-year overall CPI continues to accelerate, though November’s speedup was smaller than October’s. Here are those statistics:

Jan:                             1.37 percent

Feb:                            1.68 percent

March:                       2.64 percent

April:                         4.16 percent

May:                          4.93 percent

June:                          5.32 percent

July:                           5.28 percent

Aug:                           5.20 percent

Sept:                          5.38 percent

Oct:                            6.24 percent

Nov:                           6.88 percent

Ditto for annual core inflation:

Jan:                            1.40 percent

Feb:                            1.28 percent

March:                       1.65 percent

April:                         2.96 percent

May:                          3.80 percent

June:                          4.45 percent

July:                          4.24 percent

Aug:                          3.98 percent

Sept:                          4.04 percent

Oct:                           4.58 percent

Nov:                          4.96 percent

But for me, those baseline effects make both annual inflation rates look a good deal less alarming. Here are the monthly year-on-year overall CPI inflation rates for 2019-2020:

Jan:                            2.47 percent

Feb:                            2.31 percent

March:                       1.51 percent

April:                         0.34 percent

May:                          0.22 percent

June:                          0.73 percent

July:                          1.05 percent

Aug:                          1.32 percent

Sept:                         1.41 percent

Oct:                          1.19 percent

Nov:                         1.14 percent

November’s read was the lowest since August, and represents the third straight month of slowdown that year. And as I wrote last month, percentages with “ones” in front of them had last been seen in the summer of 2017, and these were well above 1.50 percent. So yes, the total annual inflation figures for this year have been rising each month, but these percentage change continue to result partly from 2019 rates that were abnormally low.

And those previous annual rates remained abnormally low in December (1.30 percent) and even into January (1.37 percent). So the baseline effect will start fading, but won’t be reduced to insignificance until March (because by then the previous annual rate had hit 2.64 percent).

The same baseline argument holds for core inflation. Here are its 2019-2020 annual rates of change for each month:

Jan:                           2.26 percent

Feb:                          2.36 percent

March:                      2.10 percent

April:                        1.44 percent

May:                         1.24 percent

June:                         1.20 percent

July:                         1.56 percent

Aug:                         1.70 percent

Sept:                        1.72 percent

Oct:                          1.63 percent

Nov:                         1.63 percent

Most of the absolute numbers are higher, but you see the same very low figures starting in April. And if you still doubt that they’ve been out of the ordinary, as also noted last month, these increases had stayed above two percent since March, 2018. Moreover, similar to the overall CPI, the annual baseline for the core won’t pierce that level until spring (in this case, in Apri. Indeed, before then, this baseline’s set to drop even furtherthrough Febuary, as shown here:

Dec:                         1.61 percent

Jan:                          1.40 percent

Feb:                         1.28 percent

March:                    1.65 percent

April:                      2.96 percent

Please don’t get the idea that I’m slighting the seriousness of recent inflation. There are plenty of reasons for Americans to be angry. The particularly high levels of overall CPI indicate that inflationary pressures are concentrated significantly in food and energy – categories that are not only highly visible to consumers, but essential.

In addition, the cumulation effect has to be kept in mind. Whether it comes to monthly or annual inflation rates, when they come down, that doesn’t mean that prices are actually falling in absolute terms. It simply means that they’re rising more slowly – and for most of this year from levels that are high by recent standards. For example, if prices are up one percent sequentially one month and half a percent the next, they’ve risen a total of 1.505 percent in a two-month span alone. That can really add up over time.

Finally, due to the fall in real wages, the typical American is seeing his and her purchasing power and living standards drop. In fact, in addition to issuing the CPI figures, the Labor Department also came out with the inflation-adjusted wage numbers. In November, they declined by 0.45 percent for all private sector workers, and by 0.41 percent for production and non-supervisory workers. (As known by RealityChek regulars, the Labor Department doesn’t monitor wage data for government workers because their pay is set largely by politicians’ decisions, not by economic fundamentals.)

And since January, real wages for the entire private sector are down 2.45 percent, and for latter, down 1.93 percent.

Warnings that inflation tends to feed on itself certainly shouldn’t be discounted. But even though today’s inflation has stayed higher for longer than many leading economists and analysts (like Federal Reserve Chairman Jerome Powell) have expected, the November numbers increase my confidence that the economy is moving closer to its ebbing.  And this progress should be reenforced by the end of stimulus payments individuals and families, signs that the supply chain crisis is (slowly, to be sure) coming to an end, the diminishing likelihood that Congress will pass President Biden’s Build Back Better spending bill, and the Fed’s own decision to reduce the stimulus it’s long been injecting into the economy in the form of bond buying. 

Further, as noted just above, the much-feared wage-price spiral, which fueled damaging inflation most recently in the 1970s, hasn’t taken off.

But a waning of inflation could well be accompanied by some genuinely bad news – involving a waning of growth. And sustaining an economic expansion strong enough to keep employment and wages at healthy levels but that doesn’t depend heavily on artificial government crutches is a test that U.S. leaders haven’t passed in decades.             

Those Stubborn Facts: Behind Biden’s Lousy Polls on the Economy

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Biden administration, inflation, inflation-adjusted wages, real wages, Those Stiubborn Facts, Trump administration, wages, workers

After-inflation wages for all private sector workers, Feb.-Oct., 2020: (last Trump year):  +2.81 percent 

After-inflation wages for all private sector workers, Feb.-Oct., 2021 (first Biden year):  -1.84 percent  

After-inflation wages for private non-managerial workers, Feb.-Oct., 2020: +2.84 percent 

After-inflation wages for private non-managerial workers, Feb.-Oct., 2021: -1.53 percent  

 

(Sources: “Average hourly earnings of all employees, 1982-1984 dollars, total private, seasonally adjusted,” Employment, Hours, and Earnings from the Current Employment Statistics survey (National), Databases, Tables & Calculators by Subject, Data Tools, U.S. Bureau of Labor Statistics, Bureau of Labor Statistics Data (bls.gov) and “Average hourly earnings of production and nonsupervisory employees, 1982-84 dollars, total private, seasonally adjusted,” Ibid.)

(What’s Left of) Our Economy: The New U.S. Inflation Slowdown Still Leaves Lots of Questions

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CCP Virus, core inflation, coronavirus, COVID 19, Immigration, inflation, inflation-adjusted wages, jobs report, Labor Department, New York Fed, productivity, real wages, transitory, wages, Wuhan virus, {What's Left of) Our Economy

Given how the U.S. economy could still face some major ups and downs in the next few months, largely because no one really knows what will happen with the CCP Virus and the responses from government, business, and consumers, only an idiot would confidently declare that this morning’s official report shows that the recent inflation burst is over. 

So even though I’ve been in that inflation-is-transitory camp – and therefore, that price trends haven’t yet provided the government to use its taxing, spending, and monetary policy tools to slow the economy’s expansion – I’ll just note how the inflation situation has changed in recent months.

What matters most is that the monthly inflation rate has come way down since June. During the first half of this year, the sequential pace of all price increases sped up from 0.3 percen to 0.9 percent. July’s result was down to 0.5 percent and the August figure just released by the Labor Department was just 0.3 percent – right back where it was in January, when the virus’ last powerful winter wave was cresting.

Also important: The so-called core inflation rate (this measure strips out food and energy prices, supposedly because they can be volatile for reasons having nothing to do with the level of overall national economic activity, and how fundamentally inflation-prone it is) has lost major momentum, too. Between January and June the monthly rise in prices increased from 0.1 percent to 0.9 percent . Since then, it fell to 0.3 percent in July and back to 0.1 percent last month.

Inflation pessimists can still point to year-on-year inflation rates that remain elevated by historic standards (5.3 percent for the total measure and four percent for the core). But the statistical curve is bending in the right direction on these two counts also, and as I’ve written previously, the annual numbers are still distorted – and therefore rendered useless – by the unusually weak inflation reads generated by last year’s short but steep virus-induced recession.

Further, that slowing monthly momentum counts for a lot because the biggest fear surrounding inflation is that it could feed on itself and spiral out of control, as higher and higher prices convince all sorts of customers for goods and services that prices will only keep increasing. As a result, they can fuel further inflation by stepping up purchases and pushing prices still higher (because greater demand for anything, all else equal, will enable producers and providers to charge more). Weaker monthly inflation figures indicate that these pressures have been easing lately.

Focusing singlemindedly on the core carries risks, though. Principally, food and energy prices may well belong in their own analytical category when it comes to measuring inflation. But when it comes to living life day-to-day, it’s another story altogether – since it’s hard to imagine living without them. So price trends could still be hammering consumers and businesses, and in turn the broader economy, even though the core inflation rate is signaling that all’s well.

Just as important, food and energy costs are so important that, if they last long enough, they could feed persistent inflationary fires throughout that broader economy.   

Another potential reason to check inflation optimism: The Labor Department also reported today that price-adjusted hourly wages climbed month-to-month by 0.4 percent. That’s the first positive monthly number since December’s 0.8 percent. A single data point proves little, especially in the pandemic era, but if wages begin advancing faster than overall price increases, many businesses will try to respond to these higher costs by hiking their prices – potentially adding new momentum to inflation.

The consistent drop in inflation-adjusted wages, however, between January and July shows that nothing of the kind had been happening, even though most businesses seem to keep complaining about labor shortages (which should be forcing wages – the price workers can command for their services – up strongly).

Moreover, as I’ve repeatedly pointed out, historically, American employers overall have responded to perceived or actual labor shortages by boosting their productivity – that is, using new technologies (like labor-saving equipment or software) or better management, or both, to improve efficiency and better enable themselves to absorb higher prices rather than pass them on to customers.

This scenario may sound bad for workers, and for some over various periods of time it will be. But to me, anyway, the clear lesson of history is that higher productivity does indeed, as the economic conventional wisdom holds, raise living standards (including wages) in general over time by (a) fostering the emergence of wholly new industries (which invariably need new workers); and (b) boosting existing industries’ ability to turn out more goods and services (which invariably creates the need for new workers, too).

At the same time, clearly not all businesses will take this tack. In fact, many are trying to keep wages low for many employees by agitating for more mass immigration. So far, this lobbying hasn’t succeeded, but it’s still way too early to say that workers have now regained enough bargaining leverage to ensure that their after-inflation pay continues rising robustly.

Wage increases (which I believe are long overdue) may also come to an end, or slow significantly, if weaker recent inflation stems from weaker economic growth – which would be bad for just about everyone. Unfortunately, the last monthly jobs report (also for August) and two important growth forecast series indicate that that’s precisely the case. (See here and here.)

But let’s close on a highly revealing note: One of the sources of these forecasts, the Federal Reserve Bank of New York, has just decided to suspend releasing these projections until it can figure out how to adequately take into account “The uncertainty around the pandemic and the consequent volatility in the data….” If this august institution, with its legions of Ph.D. economists, is telling us that assessing the economy’s direction and fundamental health is currently a mug’s game, that seems like a pretty good reason for caution in interpreting the new inflation report, too.

(What’s Left of) Our Economy: The New U.S. Inflation Figures Still Look Pretty Transitory to Me

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hotels, inflation adjusted wages, labor shortage, leisure and hospitality, non-supervisory workers, private sector, production workers, real wages, restaurants, wages, {What's Left of) Our Economy

Today’s official U.S. inflation figures made it somewhat more difficult to argue that the recent strong price increases recorded in the American economy are “transitory,” as the Federal Reserve and many observers (like me) have been claiming. But they don’t make these contentions that much harder, and that goes at least double for warnings about rampant wage inflation – which today’s related real wage figures debunk in an especially powerful way.

At the same time, the price surges that have taken place deserve to be emphasized in another, generaly neglected sense: However temporary, they represent another cost of the unprecedentedly powerful and not-surprisingly chaotic, bottleneck-ridden U.S. economic reopening – and one that’s followed unprecedentedly sudden CCP Virus-related lockdowns that in retrospect look to have been needlessly sweeping because the pandemic’s worst health effects were so highly concentrated among vulnerable groups like the elderly.

The most troubling development revealed in the new inflation report was the May-June acceleration in price increases overall – from 0.74 percent to 0.88 percent. That was indeed the largest monthly rise in absolute terms since June, 2008 (1.05 percent). But that May figure represented a deceleration from April’s 0.92 percent. So it looks way too early to claim that we’re seeing even the start of one of the most dangerous threats posed by inflation – a pickup in its momentum created by cost rises in various parts of the economy fueling efforts in other sectors to compensate with price increases in a process that eventually ripples widely, and with lasting effects, as in the 1970s.

(As with previous posts, I’m not too concerned with the year-on-year comparisons, since pricing trends in lockdown-y 2020 were so – artificially – weak.)

More evidence for the transitory faction: Leading the price increase charge in June were products and services like used cars and trucks (up 10.5 percent month-to-month), vehicle rentals (up 5.2 percent), and hotel and motel rates (up 7.9 percent). The first is a clear result of the stop-start nature of the economy during the pandemic period (see here for a cogent explanation), and the second and third just as obviously spring from the cabin fever-spurred burst of vacation travel in which Americans are engaged with the arrival of summer and the waning of the virus.  

Even in sectors like these, moreover, signs of weakening inflation can be seen. For example, the monthly rate of hotel and motel inflation was much higher than May’s 0.4 percent. But it was lower than April’s 8.8 percent. As for airline fares, their monthly price increases have fallen from 10.2 percent in April to seven percent in May to 2.7 percent in June.

As for wages – they keep falling in real terms in most of the economy. That is, they’re rising more slowly than inflation for goods and services. According to this morning’s data (which also cover June), after-inflation wages both for all private sector workers and for private sector production and other non-supervisory employees fell sequentially for the sixth straight month. And for both groups, the monthly June declines (0.53 percent for the former, 0.62 percent for the latter), were the biggest in roughly a year (June for the former, July for the latter).

(As known by RealityChek regulars, the U.S. government doesn’t track real or pre-inflation wages in the public sector because pay levels there are determined largely by politicians’ decisions, and therefore say relatively little about the status of the labor market.)

These new June wage figures are even more striking because the declines last year stemmed largely from businesses letting go less of experienced and usually therefore lower-paid staff as the economic outlook remained highly uncertain, and pushing up the average pay levels of remaining employees even though actual raises were rarely handed out.

It’s true that real wage increases continued in June in the leisure and hospitality super-category – whose eating and drinking establishments and hotels and motels and resorts were hit so hard during the peak pandemic months. But the June sequential increase for all employees in this sector inched up at the lowest rate (just under 0.15 percent) since January (just over 0.15 percent).

Leisure and hospitality production and non-supervisory workers fared better last month – their constant dollar wages rose by 1.16 percent, a big speed up from May’s 0.50 percent. But the April (1.87 percent) and February (1.21 percent) hourly inflation-adjusted pay hikes were stronger still. So again, it seems awfully premature to talk about raging wage inflation even here.

Moreover, there’s an important difference within leisure and hospitality between real wages in the restaurants etc sector and those in the hotels etc sector. Specifically, the latter have been growing faster for production and non-supervisory employees – and especially for June alone (0.94 percent versus 0.52 percent).  

The January-June results are even more striking for these service workers as a whole, since during this period, real wages for their counterparts in the overall private sector are actually down 1.83 percent.

Good luck to you if you believe these numbers describe a crisis-level national labor shortage, or even close.  And as I see it, it’s nearly as much of a stretch to argue on the basis of these hot June numbers that comparably hot inflation is here to stay.   

(What’s Left of) Our Economy: The Latest Data Remain Full of Normalization Puzzles

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Biden, CCP Virus, China, construction, coronavirus, COVID 19, Donald Trump, exports, goods trade, imports, inflation, inflation adjusted wages, labor shortages, leisure and hospitality, lockdowns, manufacturing, metals, non-oil goods trade deficit, non-supervisory workers, private sector, real wages, reopening, retail, services trade, shutdowns, tariffs, Trade, Trade Deficits, transportation, wage inflation, wages, Wuhan virus, {What's Left of) Our Economy

While I was away for a few days last week, two major U.S. government reports came out both giving off conflicting signals on on whether the economy has started to return to normal in critical ways as the CCP Virus subsides and reopening, along with consequent changes in consumer behavior, proceed.

The monthly trade figures (for April) showed a sequential decline, following a record surge, in America’s chronically huge gap between exports and much larger amounts of imports. Moreover the monthly drop took place as economic growth sped along at unusual rates after being shut down by government mandates and consumer caution. So maybe they’re an early sign that a return to immediate pre-virus conditions has begun?

Or is their most important message that these deficits, and especially the import levels, are still hovering near all-time highs in (the most widely followed) pre-inflation terms even though the economy as of the latest (first quarter) numbers is still a bit smaller in (the most widely followed) inflation-adjusted terms than during the last full pre-pandemic quarter (the fourth quarter of 2019)?

Indeed, the deficits are gargantuan even though President Biden has left former President Trump’s substantial tariffs on metals and goods from China practically untouched. 

The monthly inflation numbers (for May) are similarly confusing. They revealed that consumer prices (just one inflation measure published by Washington, but an important one) rose by 4.93 percent in seasonally adjusted terms. That was their fastest annual pace since September, 2008’s 4.95 percent. Surely, as widely claimed (including by the Federal Reserve, which wields so much influence over the economy, this upswing stems from a combination of bottlenecks resulting from (1) the sudden, widespread reopening; (2) the unusually low overall inflation numbers generated a year ago, when the economy was near the depths of its viruts- and shutdown-induced slump; and (3) the immense dose of stimulus injected into the economy by both elected politicians and the unelected Fed.

At the same time, the Fed has told us that its stimulus isn’t ending anytime soon, and although the Biden administration and Congressional Democrats are displaying some cold feet about approving more such levels of economic fuel (e.g., in the form of outlays on infrastructure, and a wide variety of income supports and enhanced unemployment benefits), it’s difficult to imagine that most or even much of this spending will actually be withdrawn even once a post-virus recovery is an indisputable reality.

But the biggest surprise of all: Despite the economy-wide inflation pressures, and by-now-routine claims that employers are dealing with nearly crippling labor shortages, wages overall adjusted for inflation keep going down.

Compounding the confusion over whatever conclusions can legitimately be drawn from these two reports: They cover two different months.

But let’s begin with the most important details from the April trade report. The ambiguity embodied in the data begins with the total deficit figure. The record March result was revised up from $74.45 billion to $75.03 billion but April’s $68.90 shortfall for goods and services combined, though the second worst monthly figure ever, was 8.17 percent smaller. That’s the biggest sequential drop since February, 2020 (8.39 percent), when China’s export-heavy economy was still largely closed because of the virus.

The same holds for the goods trade gap. The record March figure was revised up, too, from $91.56 billion to $92.86 billion. But April’s $86.68 billion result represented a 6.65 percent monthly decline, and this falloff was the biggest since the 8.39 percent plunge of January, 2019 – when American businesses were still adjusting both to Trump’s tariffs and anticipated tariffs.

Also still fueling the high U.S. deficits – a worsening of services trade balances. Here, U.S. trade has long been in surplus, but the surpluses keep shrinking because service sectors like travel are still suffering from the pandemic’s arrival and the consequent decimation of travel and othe transportation in particular. In fact, the April figure of $17.78 billion was the lowest since September, 2012’s $18.62 billion.

One key set of trade flows does, however, provide some evidence of Trump tariff effectiveness – U.S. non-oil goods trade, which encompasses those exports and imports whose magnitudes are most heavily influenced by trade policy (because, as known by RealityChek regulars, trade in oil is almost never the subject of any trade policy decisions and services trade liberalization remains at very early stages). In April, the monthly shortfall retreated 4.16 percent from its March record of $90.12 billion to $86.37 billion – which is only the fourth highest such total ever.

The import figures I focused on last month exhibit the same overall patterns: April saw big drops from record levels but the absolute numbers remain distressingly high. March’s initially reported record $274.48 billion in total imports was revised up considerably – to $277.69 billion. April’s total of $273.89 billion represented a 1.37 percent drop, but nonetheless was the second worst such figure on record.

March’s record monthly goods import figure was upgraded, too – from $234.44 billion to $236.52 billion. April’s total of $231.97 billion was a 1.92 percent drop but these purchases also still represented the second highest of alll time.

As for non-oil goods imports, the $215.33 billion April total was 1.98 percent down from an upwardly revised record $219.68 billion, and also the second biggest ever. Biggest drop since last April’s 10.91

Whether normalization is returning in manufacturing is more difficult to tell. Imports in March hit a record $207.59 billion, and did drop by 4.59 percent sequentially to $198.06 billion in April. That decrease, however, was a typical monthly move for manufacturing imports, and the April figure was still the third highest ever.

Incidentally, the April manufacturing deficit of $103.60 billion was 4.64 percent lower than March’s $108.66 billion. The March total was the second highest on record, but April’s figure was only the seventh all-time worst. The record, $110.20 billion, came last October, and it’s notable that the gap has narrowed on net despite the resilience shown during the pandemic period by manufacturing output.

More evidence of the Trump tariffs’ impact comes from the data on goods trade with China – whose products have attracted nearly all of these levies, and that cover hundreds of billions of dollars worth of products. The April figure of $37.59 billion was 6.56 percent lower than its March predecessor – a thoroughly unexceptional sequential decline and monthly level by historical standards. But the monthly dropoff was consideraby greater than the aforementioned 1.98 percent decrease for non-oil goods – the closest global proxy.

As a result of all these inconclusive developments, I’ll be awaiting the May trade report with even more interest than usual.

But despite all the uncertainties I mentioned at the start of this post, those May inflation figures have made me more confident than before in my previous contention that current price surges are anomalies by the extremely low inflation generated by the CCP Virus-battered economy of a year ago, and by the sudden reopening of so much of the economy following the long shutdowns and lockdowns. Even clearer, as I see it: Claims of significant, troubling wage inflation are especially weak.

After all, that 4.93 percent year-on-year May price increase followed a previous May-to-May rise that was just 0.22 percent. That was the feeblest such rise since September, 2015’s 0.13 percent. In addition, May’s month-to-month 0.64 price advance was smaller than April’s 0.77 percent. Two months do not a trend make, but these numbers certainly don’t point to raging inflation fires.

Nor do the wage data. Otherwise after-inflation total private sector wages wouldn’t be down more on-month in May (-0.18 percent) than in April (-0.09 percent). And the same couldn’t be said of constant dollar wages for non-supervisory workers (-0.20 percent in May versus flat in April).

Getting more granular, the price-adjusted wage trends are as bad or worse in construction; trade, transportation and utilities overall; retail trade; and education and health services.

The two big exceptions: the leisure and hospitality workforces that have been so decimated by the virus (and especially the non-supervisory group) and the transportation and warehousing sub-sector of the transportation and utilities industry category that contains a trucking sector unusually strained by the rapid reopening. In both cases, however, (and especially the leisure and hospitality industry), inflation-adjusted wages in absolute terms are well below the national private sector average. If anything, therefore, it seems like some wage inflation for these workers is long overdue.

(What’s Left of) Our Economy: Wage Inflation? Seriously?

Tags

CCP Virus, construction, coronavirus, COVID 19, housing, inflation, inflation-adjusted wages, labor shortages, leisure and hospitality, private sector, real wages, recession, recovery, wage inflation, wages, Wuhan virus, {What's Left of) Our Economy

Reports keep abounding that U.S. businesses can’t find enough workers to match their needs amid an ongoing rapid reopening of the economy from its lockdowns-induced slump, and that companies are therefore being forced to attract employees with ever higher – and even alarmingly higher – pay offers.

All of that makes perfect sense except for one critical detail: The official U.S. wage figures show precious few signs of soaring wages whatever. In fact, when you adjust for the inflation that has been recorded in Washington’s statistics, you see that workers’ hourly pay generally keeps falling behind, not racing ahead, of rising prices in the economy.

First let’s look at the pre-inflation figures for the entire economy (except for government, where pay levels mainly reflect politicians’ choices, not economic fundamentals).

When it comes to the entire private sector, hourly earnings in April (the latest figures available, which are still preliminary) grew by 0.33 percent year-on-year. That result, though, is somewhat misleading, since the previous April’s level was artificially high. That month, remember, was the depth of the CCP Virus-induced recession, and companies were largely laying off their least experienced (and cheapest) staffers. So the wage number for retained workers rose (and strongly) simply because their pay levels remained relatively lofty, and they accounted for a much bigger percentage of employment. Therefore, perhaps that misleadingly high April, 2020 figure was the main reason that the 2020-2021 improvement is misleadingly low?

Unfortunately, the data shoot down that hypothesis, too. For example, between “normal” April, 2018 and 2019, economy-wide pre-inflation wages jumped by 3.30 percent. That’s ten times the 2020-2021 increase. And in fact, the April, 2019 to 2020 pay hike was by far the smallest since 2006 (when this particular data series began).

But maybe the biggest wage inflation only began this calendar year – when overall inflationary pressures have arguably become visible?  Between January and April, current dollar hourly wages for the entire U.S. private sector did climb by 0.84 percent, and that advance was more than twice as fast as the April year-on-year change. Moreover, this 2021 wage growth was faster than that for “normal” January-April, 2019 (0.76 percent). Indeed, it was the fastest since 2008, another recessionary year when layoffs heavily concentrated among the least experienced, lowest-paid employees rendered the 0.90 percent result artificially high.

But aside from 2008, the January-April increase wasn’t that much higher than that seen in many recent years. For example, the January-April result for “normal” 2019 was 0.76 percent. For 2018, it was 0.71 percent. Just as important – does anyone think that those years, or any time lately, has been a golden age of wage increases?

There’s another possibility to consider: that strong wage inflation has taken place only among the production and other non-management workers, who both tend to be the lowest-paid and who in principle therefore are likeliest to be kept out of the job market by unusually generous unemployment benefits.

Average hourly earnings before inflation for this group have actually risen much more strongly year-on-year in April than for the overall workforce – by 1.15 percent versus 0.33 percent. And this 2020-2021 result, as with wages for the entire workforce, does seem to have been artificially depressed by the equally artificially high (7.84 percent!) figure for 2019-2020.

But historically, the 2020-21 wage increase not only looks anything but exceptional. It’s positively pitiful – by far the weakest April-April rise on record. Just to compare, from April to April in “normal” 2019 and 2018, current dollar wages for these “blue collar” workers were up 3.46 percent and 2.83 percent, respectively. .

Are the trends much different for January-April periods – which in principle should reveal whether wage inflation has waited till this calendar year to take off? For 2020 so far, pre-inflation blue collar hourly pay has improved by 1.23 percent – more than the 0.84 percent increase for all private sector workers.

That’s much slower than the comparable 5.36 percent jump last year, but we agree that last year was weird. The 2021 results are faster than those of normal 2019 (0.91 percent), but the gap doesn’t seem gargantuan to me. At the same time, current dollar January-April pay increases of one percent or greater for blue collar workers have been experienced five times since 1998, and before then, you need to go back to the late-1980s for a period when they were routine.

So describing the January-April, 2021 results as wage inflation-y could be justified. But that’s a far cry from reasonably concluding that this inflation will have much in the way of legs, since the economy, as widely noted, has never seen this kind of sudden stop-start transition in peacetime.

There’s another set of numbers, though, that needs to be examined to put the wage inflation issue in full perspective – recent wage changes after taking into account inflation across the entire economy. And in these real terms, hourly pay has actually been going down lately.

That’s true for all private sector workers between last April and this past April (down 3.66 percent).

It’s true for these workers between January and April of this year (down 0.88 percent).

It’s true for private sector blue collar workers between last April and this past April (down 3.37 percent).

And it’s true for these workers between January and April of this year (-0.71 percent).

Moreover, the “2020 effect” caused by that year’s artificially high baseline doesn’t seem to account fully for this wage deterioration. It’s definitely been apparent for all private workers (for whom average real wages soared by 7.81 percent between 2019 and 2020), and for private sector blue collar workers (whose inflation-adjusted average hourly pay surged by 7.68 percent).

In addition, since 2006, (when real wages for the whole private sector workforce began to be tracked), these wages have fallen on an April-April basis five other times. But they’ve never fallen by remotely as much as in 2021. And this year, employers are supposed to be desperate for workers. Much the same holds for private sector blue collar workers during this period.

Looking at the January-April periods, the 2021 decrease of 0.88 percent for all private sector workers is the second biggest since 2006 (trailing only 2011’s 0.97 percent). Further, this four-month stretch has only seen one other instance of constant dollar wage decrease (2019’s 0.37 percent). And the 2021 result is all the more strange given the strangely strong and sudden nature of the recovery.

When it comes to their blue collar counterparts, 2021’s 0.71 percent drop in after-inflation wages between January and April is also the second biggest since 2006 (trailing only the 1.24 percent fall-off suffered, again, in 2011). Pay declines during this period for these workers has been more frequent than for the private sector overall. (They’ve occurred five times all told before 2021.) Again, however, 2021’s has been puzzlingly steep given the economy’s unusually fast recovery this year and all the labor shortage claims that have resulted.

More convincing signs of out-of-the-ordinary wage inflation can be seen in sectors like construction and leisure and hospitality, especially during the first four months of this year. In the former, which has enjoyed strength in residential housing throughout the pandemic period, pre-inflation wages have increased by 1.24 percent. That’s the most since 2006 (again, the earliest data available) – though not outlandishly so. But after accounting for inflation, real construction wages have dropped by 0.49 percent between January and April of this year.

For blue collar construction workers, pre-inflation wages have improved by 1.75 percent during the first four months of 2021 – another post-2006 high. But even though their real wages have dipped during this period by only 0.17 percent, that’s still a dip.

The leisure and hospitality industries are of course coming out of a disastrous pandemic period, and with Americans now flocking to restaurants and bars and resuming travel, it’s not surprising that January-April current dollar hourly pay has risen by 3.71 percent – far and away a post-2006 record. The post-inflation number is up nicely, too (1.98 percent), and also a performance that’s smashed previous records. So this sector so far is telling a stronger wage inflation story.

Non-supervisory blue collar leisure and hospitality workers have fared even better, with pre-inflation wages zooming up by 5.87 percent between January and April of this year, and real hourly pay better by 3.98 percent.

Will these healthy pay hikes continue? That’s a big question for these parts of the economy. But even though wage figures don’t capture the entire compensation picture (in particular, they leave out non-wage benefits and all the signing bonuses employers are reportedly offering to lure workers off the sidelines), with wage and salary income representing more than 80 percent of total employee compensation throughout the economy (including in the public sector), they capture lots of the picture. And the overall message is that, like a famous economist once said about computers being everywhere but in the productivity statistics, wage inflation worth worrying about, and related worker shortage claims, to date are everywhere but in the wage statistics.

Im-Politic: On the Economy, Obama’s Record Looks Stronger than Trump’s

Tags

Barack Obama, CCP Virus, coronavirus, COVID 19, election 2020, Employment to Population Ratio, GDP, gross domestic product, Im-Politic, Jobs, Joe Biden, Labor Force Participation Rate, labor productivity, manufacturing, non-farm jobs, private sector, productivity, real GDP, real private sector, real wages, recession, subsidized private sector, Trump, value added, wages, Wuhan virus

Not surprisingly, as this U.S. presidential cycle gets ever more intense, so has the debate over which boasts a better record in helping steer the nation’s economy: the Obama administration in which Democratic presidential nominee Joe Biden served as second-in-command, or the incumbent Trump administration. I’ve just looked over some key data, and the verdict on most counts goes to the Obama administration. The margin of victory here isn’t huge, but it’s anything but razor thin, either. Moreover, any Obama edge is surprising given that the economy is President Trump’s major advantage in nearly all the polls.

All the same, here are the data. They compare performance during the last three full years of the Obama presidency and the first three full years of the Trump presidency. In my view, these time-frames deserve priority because they’re the ones closest to each other in the same expansionary business cycle, making apples to apples results much likelier.

The time-frames of course leave out the CCP Virus period, during which all the Trump numbers sank like stones. But if you regard the virus’ economic effects as purely artificial, having nothing to do with the economy’s fundamentals (as I do), then you want to strip them out.

Other methodological notes: Although the jobs-focused data come out from the federal government on a monthly basis, and therefore permit comparisons between completely identical (and virus-adjusted) three-year periods, the economic growth and productivity data don’t, so I show Trump results both through the first quarter of this year (affected by the shutdowns that began in March) and through the last quarter of 2019. In addition, regarding the monthly figures, because of the January 20 inauguration date, I peg the end of the Obama administration as January, 2017 and the beginning of the Trump administration as February, 2017.

And off we go, starting with overall employment, which consists of the Bureau of Labor Department’s U.S. employment universe – “non-farm jobs.”

Obama: +5.55 percent            Trump: +4.56 percent

But of course, non-farm jobs include all government jobs, and their status has much less to do with the economy’s underlying strengths and weaknesses than with politicians’ decision. So here are the numbers for private sector jobs.

Obama: +6.56 percent            Trump: +5.04 percent

So advantage Obama again. As RealityChek regulars know, however, not all private sector jobs are created equal. In fact, many barely deserve the term at all, because their circumstances depend so heavily on government spending. Healthcare is of course the leading example. Therefore, it’s useful to examine the employment results in what I’ve called the “real private sector”.

Obama +6.22 percent             Trump: + 4.63 percent

It’s another Obama out-performance. This string is broken when it comes to manufacturing jobs, however.

Obama: +2.38 percent           Trump: +3.78 percent

But Obama comes out ahead on inflation-adjusted wages for the entire private sector.

Obama +3.69 percent           Trump: +2.99 percent

And the margin is even bigger for real manufacturing wages.

Obama: +3.15 percent          Trump: +0.74 percent

One problem with looking at jobs gains or losses, or even the unemployment rate, is that these numbers don’t tell the whole story about the health of the labor market. To fill in the gaps, economists like to examine two performance measures called the Labor Force Participation Rate, and the Employment to Population Ratio.

The former, according to well regarded left-of-center economics think tank, reveals “the number of people in the labor force—defined as the sum of employed and unemployed persons—as a share of the total working-age population, which is the number of civilian, non-institutionalized people, age 16 and over.”

The latter, the same source explains, shows “the number of people currently employed as a share of the total working-age population, which is the number of civilian, non-institutionalized persons, age 16 and over.”

For what it’s worth, this reliable economics and finance website claims that the Employment to Population Ratio provides the best indication of job shrinkage or growth. So let’s begin there.

Obama: 58.8 percent to 59.9 percent       Trump: 59.9 percent to 61.1 percent

Pretty much a standoff.

As for Labor Force Participation:

Obama: 62.9 percent to 62.6 percent       Trump: 62.8 percent to 63.4 percent

Advantage, Mr. Trump.

As previously mentioned, the economic growth figures are only reported quarterly. Keeping that in mind, here’s how the two administrations stack up. The most commonly followed measure of the economy’s size and how it changes is inflation-adjusted gross domestic product (GDP).

Obama: +8.19 percent           Trump: +5.75 percent

These data, though, include shutdown-y March, 2020. Taking the story only through the end of 2019 brings the Trump years’ performance up to 7.11 percent – but he still trails.

Interestingly, even including the first quarter of this CCP Virus-y year, Mr. Trump’s record is slightly better when another metric for economic growth is used – value-added. Its value lies in trying to eliminate the double- and even more overcounting that results when the of the parts and other inputs of a complicated product are counted both when they’re turned out individually, and when they’re contained in that final product.

Obama: +12.09 percent          Trump: +12.24 percent

The Trump presidency’s margin is even bigger in manufacturing value-added, and even including the first quarter:

Obama: +7.09 percent            Trump: +10.58 percent

Importantly, all the above value-added numbers are pre-inflation. After-inflation value-added data are tracked by the federal government, too, but they’re not even measured on a quarterly basis. Only full-year numbers are available. So since these make precise comparisons less possible, I’m skipping them.

Finally, here are numbers that hardly ever make the news, but might be the most important of all – the productivity data. These various measures of efficiency are widely viewed by economists are crucial to determining how healthy and durable economic growth is and will be, and therefore how strongly and for how long living standards can rise.

Results aren’t up-to-date enough for the broadest measure of economic efficiency – multi-factor productivity. But they are for the narrower measure, labor productivity – which gauges how much a single worker can produce in a single hour on the job – starting with the overall economy

Obama: +3.97 percent           Trump: +3.95 percent

And if you want to remove the first quarter of this year, because of the virus effect in March, overall labor productivity during the Trump period was up 4.02 percent

Labor productivity is monitored for manufacturing, too, and here are those statistics including the first quarter of this year:

Obama: -2.57 percent           Trump: +0.29 percent .

Oddly, if the first quarter is removed, the Trump years’ performance worsens a bit – and even falls to an overall dip of 0.09 percent. But however poor, it still tops the record of the Obama years.

So why are the Trump economy poll numbers so good? One possible answer: The final year of the Obama presidency was feeble by nearly all measures. Real gross domestic product advanced by only 1.70 percent. Total employment grew by a mere 1.64 percent, versuss 2.19 percent in 2014. National manufacturing employment actually dipped by 6,000 from 2015 levels. Real wage growth overall slowed from 1.26 percent in 2014 to 0.56 percent in 2016. And inflation-adjusted manufacturing wages performed scarcely better.

Moreover, as the New York Times article linked above makes clear, the public’s evaluations of the Trump economic record are incredibly partisan – often conflicting with a respondent’s actual situation.

It’s also possible and legitimate, as I’ve noted, to point to some important reasons for this Trump under-performance.  The President’s trade policies clearly disrupted national and global supply chains, and the consequent inefficiencies surely dragged on GDP and employment in the short term.  Boeing aircraft’s safety woes have undercut national economic performance lately, too.  But good luck to you if you think these considerations are going to have any effect on voters.  

I’m hardly naive enough to think that these or other economic facts will be enough to determine November’s outcome. And I have no idea how voters will factor in the deep CCP Virus-induced recession into their thinking. But the facts aren’t a throwaway, either, and although the Obama record didn’t exactly thump Mr. Trump’s, it’ll certainly provide Biden with considerable ammunition.

(What’s Left of) Our Economy: Newest Numbers Show Trump’s Real Wages Problem Continues

Tags

Barack Obama, election 2020, inflation adjusted wages, manufacturing, private sector, real wages, Trump, wages, {What's Left of) Our Economy

The big economic message sent by today’s official U.S. data on inflation-adjusted wages is highly concentrated in the so-called benchmark revisions – which adjust the results going back to 2015. And the big political message sent by these revisions is that President Trump’s economic record still suffers from a serious real wage problem – especially in the manufacturing sector, and especially compared with his predecessor, Barack Obama, whose supposed economic failures Mr. Trump has made a major campaign issue.

To be sure, the newest (and unrevised) January statistics weren’t great news for Trump-World, either. Total private sector pay in real terms inched up only 0.09 percent month-to-month, and the annual increase was a mere 0.64 percent. Between the previous Januarys, constant dollar private sector wages improved by a much faster 1.77 percent. (The Labor Department doesn’t track public sector wages, because their levels and growth are determined overwhelmingly by government decisions, and therefore supposedly say little about the state of the labor market or of the entire economy.)

The story for blue-collar workers (called “production and nonsupervisory workers” by the Labor Department and abbreviated here “N/S”) was only a little better. Their real wages flat-lined on month in January, but year-on-year they were up 0.75 percent – more strongly than overall private sector wages, and thereby in synch with numerous observations that pay at the lower end of the scale is rising faster than it is at the upper end.

In manufacturing, however, that picture is more mixed. Overall after-inflation manufacturing wages dipped by -0.09 percent sequentially in January, though they advanced by 0.74 percent year-on-year. That rise was better not only than that of total private sector workers, but than of its own performance the previous year – which saw zero increase in these wages.

Price-adjusted wages for manufacturing’s blue collar workforce, however, fared only negligibly better than for all manufacturing employees – flat-lining versus a small decline. And year-on-year they increased by less than a third the rate of pay for all manufacturing workers (0.23 percent) and much more slowly than the year before (1.37 percent).

The good news for Mr. Trump – the revisions put more of a shine on his job creation record over the last two years, as shown in the tables below. (Keep in mind that they only take the story through December, 2019 – because today’s January figures haven’t been revised yet.)

                                                                     Unrevised

                                     Total private     N/S private     Total mfg      N/S mfg

Year-on-year, 2019:         +0.64%           +0.75%          +0.74%        +0.45%

Year-on-year, 2018:         +0.56%          +1.63%                0%          +1.14%

                                                                      Revised

                                    Total private      N/S private     Total mfg      N/S mfg

Year-on-year, 2019:        +0.73%           +0.85%           +0.74%        +0.45%

Year-on-year, 2018:        +1.40%          +1.74%                 0%          +1.03%

Interestingly, though, the biggest changes came for all private sector workers. And the updates make the picture for blue-collar manufacturing workers slightly gloomier.

But the revisions still left the Obama years’ real wages performance looking better than those of the Trump years – a comparison that might be raised frequently during this election year. The 34-month periods have been chosen because that’s the amount of time Mr. Trump has been in office since his first full month in the White House (February, 2017. Further, the two time periods are right next to each other in the current business cycle.

The bottom line? The gap between the two administrations closed for all private sector workers and blue collar private sector workers. But it widened in the manufacturing sector.

                                                                Unrevised

                                  Total private      N/S private      Total mfg    N/S mfg

1^st 34 Trump months:    +2.53%           +2.72%          +0.65%       +2.77%

last 34 Obama months: +3.50%           +3.97%          +3.05%       +2.97%

                                                                  Revised

                                  Total private      N/S private      Total mfg    N/S mfg

1^st 34 Trump months:    +2.71%            +3.05%          +0.65%      +2.65%

last 34 Obama months: +3.49%            +3.97%          +3.44%      +3.34%

And finally, the impact of the revisions on real wages trends during the current economic recovery, and on the previous two expansions:

                                                                                 Unrevised

                                                             Private    N/S private    Mfg      N/S mfg

1990s expansion (2Q 91-1Q 01):           n/a          +6.37%        n/a       +2.18%

bubble expansion (4Q 01-4Q 07)         : n/a          +0.35%        n/a       -2.77%

current expansion (2Q 09 – present): +6.30%      +6.79%    +1.59%   +3.01%

                                                                                 Revised                      

                                                              Private   N/S private    Mfg      N/S mfg

1990s expansion (2Q 91-1Q 01):            n/a          +6.51%       n/a        +1.81%

bubble expansion (4Q 01-4Q 07):           n/a         +0.35%        n/a        -2.77%

current expansion (2Q 09 – present):  +6.70%     +7.01% +   1.59%    +2.77%

The big takeaways, as I see them: The real wage performance of the current recovery looks somewhat better than previous thought – except for blue-collar manufacturing paychecks. And the widely admired 1990s expansion looks better for blue-collar private sector workers in toto but worse for their manufacturing counterparts.

Several recent polls show Americans to be unusually happy about the state of the economy and their own personal situations. (For the latest, see here.) These real wage figures indicate that it’s not yet entirely clear why.