14 Aug COTW: Wages and Sentiment
- After 24 consecutive months of negative growth, real wages turned positive for the first time in June, as wages outpaced inflation for the first time since 2021. Real average hourly earnings remained positive in July, for a second consecutive month.
- Recently, there has been a strong correlation between wages and consumer sentiment. Real wage growth turned negative in March 2021, and consumer sentiment (as measured by the University of Michigan Consumer Sentiment Index) started to decline in April 2021. Both real wage growth and sentiment bottomed out in June 2022, and have both been ticking up since then.
- The University of Michigan Consumer Sentiment Index recorded a reading of 71.6 in July, the highest since October 2021, as consumers were buoyed by lower inflation and a resilient labor market.
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