That is great news of course. Do note however the following (NYT):
The median household income is still 1.6 percent lower than in 2007, before the recession. It also remains 2.4 percent lower than the all-time peak reached during the economic boom of the late 1990s.
Even with this unexpected and quite remarkable income gain, America is close to having gone twenty years without a significant money pay hike for its middle class category.
And do note this: two days ago, everyone was saying things felt OK but still sluggish, and they were citing mounds of evidence on behalf of this view. Maybe they still are right, don’t overreact to a single number. You don’t have to be a “negative Nellie” to think it doesn’t feel like a world of five percent wage growth.
As a separate point, note that essentially none of those income gains went to rural areas. That meant a 7.4% wage gain for larger cities — does the raise the import of the case for deregulating building?
Returning to the main story, I often hear it said that the wage stagnation problem is simply the result of a deep and debt-ridden recession. No doubt that is one factor, but it does not explain why the bad wage data go back to 1999-2000, before the real estate bubble much less the Great Recession. Something structural has gone badly wrong in the American economy, and let’s hope this data point stands as a major relevant sign in seeing its repair. I am not yet so optimistic, I am sorry to say.
Addendum: I was and still am agnostic on what and when the Fed should do next. But those of you who cite lack of rising wages as a good short-run indicator (not my view, by the way see the post directly below) of inflationary pressures — does this change your mind?