“When discussing affordability, it is important to note that while the CPI price level has increased 26% since 2019, wages have increased 30%,” he said, citing data from the U.S. Bureau of Labor Statistics.
“I’m less convinced about this K-shaped recovery than other people are,” Furman said. “Everyone wants prices to be 25% lower. Nobody wants their wages to be 25% lower.”
But take a closer look, and the reasons that many Americans aren’t convinced become clearer.
“While this return to pre-pandemic levels is an encouraging sign for many American workers and their paychecks, it is sobering for the 43% of workers who aren’t keeping up,” Indeed Hiring Lab economist Cory Stahle wrote in the report. “The generally rising tide of healthy wage growth is lifting most boats—but not all of them.”
Rather than wage growth and consumer spending contradicting the K-shaped economy, as Furman noted the data initially suggests, it may actually be a sign the two-tiered environment is here to stay.
“From a macroeconomic perspective, higher- and middle-income households’ consumer spending accounts for the bulk of overall US consumption, so the economy can continue to grow as a ‘K’ for some time,” BofA analysts wrote.
