I have been saying this for months: wage growth is outpacing inflation. What most Americans suffer from is the blinding punch between the eyes when they see the escalating prices at the supermarket, reminding them that everything from bread and eggs to pre-cooked meals have all gone up substantially in the last couple of years.
Fortunately, gas prices at the pump have been muted, with most parts of the country enjoying $2.80-per-gallon gas, which is a long way from the $4.00 per gallon of the post-pandemic years. But that doesn’t tamp down the affordability perception among many Americans; stable gas prices have not served to soften the blow of much higher prices for groceries.
The fact is that the emotion of affordability is an illusion for most Americans. That is because they don’t offset those stare-you-in-the-face grocery prices by the growth in their incomes, a fact that is very real and somehow overlooked when people complain about affordability.
Since the Pandemic. Wage growth has outpaced inflation in the most recent couple of years, but not over the whole 2020–2025 period. Overall, real wages are roughly flat to slightly down compared with pre-2020.
Cumulatively, consumer prices are up about 22% to 25% since early 2020, while average wages are up a similar amount. To be fair, one analysis finds prices up 22.7% since January 2021 versus wage growth of 21.8%, implying real hourly earnings down about 0.7%. In 2021–2022, inflation spiked (peaking around 9% annual CPI in mid-2022), exceeding even unusually strong wage gains and eroding purchasing power. But during those “high-inflation” years, most workers saw pay increases that kept up with rising prices.
Since roughly early 2023, wage growth has generally been higher than the inflation rate on a year-over-year basis. From May 2024 to May 2025, real average hourly earnings rose 1.4%, and real weekly earnings rose 1.5%.
From November 2024 to November 2025, real average hourly earnings increased 0.8% for all employees, and 1.1% for production and nonsupervisory workers. From December 2024 to December 2025, real average hourly earnings increased about 1.1%, showing that recent pay gains are still slightly outpacing inflation. Other trackers like the Atlanta Fed and private wage indices also show wage growth running modestly above the CPI in 2024–2025, though the margin has narrowed.
Around mid-2025, roughly 57% of workers had wage gains exceeding inflation, similar to pre-pandemic shares, but about 43% were still lagging behind. Lower- and middle-income groups have recently seen somewhat larger cumulative gains over inflation (around 3.5 to 4.5 percentage points by end-2024) than top earners, but they also suffered more during the high-inflation period.
In Short. In the last couple of years, yes, wage growth has generally outpaced inflation. So if wages have outpaced inflation for a few years now, and many Americans are earning a lot more than they were before the pandemic, why then the unrelenting economic gloom?
Because all of the above statistics don’t take into consideration certain big consumer costs that loom in the background for most Americans: the unaffordability of housing and childcare, which the inflation vs. wage growth analysis really doesn’t take into consideration.
Again, to be fair in analyzing the affordability issue, the American Dream has never felt further out of reach. And it’s not just because the house with the white-picket fence and the nanny to care for the children are unaffordable. They are also, for many, unavailable.
A years-long standstill in the housing market has thwarted a generation of first-time buyers and kept growing families in homes that are too small. And further, in much of America, there simply aren’t enough child care professionals to take care of all the children of working parents.
While the prices in the supermarkets may serve as a billboard that supports the unaffordability argument, it is really the big-ticket items like housing and childcare that weigh on the typical consumer.
AVP Pulse Index. The slight see-sawing of the Pulse Index continued last month, with a swing up (+1.1%) month-over-month, and remains firmly positive on both a year-over-year (+3.6%) and rolling 36-month (+14.3%) basis. These percentages closely mirror the general trend and direction over the last several months, with occasional (but very slight) dips from time-to-time. A big push in a positive direction from the Dodge Momentum Index (+7.0%) and the Construction Confidence Index (+3.3%) served to offset the only down indicator last month, which was the Construction Employment Rate (-0.9%).
The combined sense of direction and strength in the market is supported by anecdotal evidence (not taken into consideration in calculating the Index) that both aggregate and cement volumes are trending upwards.
It is important to note that several of the federal indices that are included in our algorithm were still not available at press time, as they are still in catch-up mode from the shutdown, so once again, the Pulse Index has been driven by a much smaller number of inputs to our model.
It is worth repeating that the AVP Pulse Index is a trend measure, like an arrow, albeit a crooked one; it measures a rolling 36-month period that points up or down depending on the direction of the construction industry.