Pay was starting to outpace US inflation. Can it keep up?

Stubborn inflation is not only upsetting investors, who are hoping for interest rate cuts; it’s also threatening to undermine one of the most positive trends in the U.S. economy: the rise in workers’ real wages.

Real – or inflation-adjusted – pay took a tumble for a time during the pandemic, as prices rose far faster than Americans’ wages and salaries. But a year and a half ago, that equation flipped, and workers’ buying power began to rise again. By this past January, it looked as though their real wages were poised to resume a historic surge that started in the mid-2010s.