Markets being choppier at these levels makes sense, says Wells Fargo's Scott Wren
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Newsweek
20 minutes ago
- Newsweek
Four Jobs Where Wages Are Outpacing Inflation
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Wages have largely lagged behind inflation over the past few years, a shortfall attributed to a post-pandemic price surge the effects of which continue to reverberate through the economy. According to a new study by financial services firm Bankrate, inflation has risen 22.7 percent while Americans' wages have only grown 21.5 percent since January 2021. This has resulted in a current wage-to-inflation gap of -1.2 percent, meaning that income has on the whole failed to keep pace with overall price increases. Why It Matters The disparity between wages and inflation means most Americans—even those who have received bumps in their paychecks—are effectively seeing a drop in their in overall purchasing power. However, while some industries lag well behind, researchers found that certain professions have seen their pay keep up with, even outpace, price hikes since the pandemic. What To Know Bankrate drew on data from the Bureau of Labor Statistics—specifically the Consumer Price Index (CPI) and Employment Cost Index (ECI)—to measure sector-specific wage growth against inflation since 2021, and found that four industries have seen wages rise faster than prices over this period. Earnings in the accommodations and food services category have risen the fastest since 2021, climbing 27.5 percent and exceeding inflation by 4.8 percent. Next is leisure and hospitality, where wage growth has created a 4.1 percent lead over inflation. Health care and social assistance follows with a 1.7 percent wage-to-inflation gap, while retail earnings have outpaced price increases by 0.5 percent. Elise Gould, senior economist at the Economic Policy Institute and an expert in wage dynamics, told Newsweek that areas such as leisure and hospitality "experienced much faster wage growth coming out of the pandemic because of the sheer numbers of jobs lost and the need for employers to scramble to attract and retain workers." These effects, she said, were more pronounced for those at the lower end of wage distribution, who required more "enticement" from employers to return to less-compensated, face-to-face roles—bargaining power that was reinforced by the financial supports put in place by policymakers during the pandemic. Ahu Yildirmaz, President & Chief Executive Officer of the nonprofit Coleridge Initiative, which assists governments in using data for policymaking, said that the sectors where wages have kept up "not only faced intense competition for workers, but they also started from relatively lower wage levels." "That means percentage increases appear larger and more noticeable," he told Newsweek, adding that health care is a "bit of a special case," given funding support during the pandemic "helped reinforce wage gains, adding to the upward pressure." A trader works on the floor of the New York Stock Exchange, Monday, August 18, 2025. A welder carries steel at the site of a construction of a housing project, Thursday, July 31, 2025, in... A trader works on the floor of the New York Stock Exchange, Monday, August 18, 2025. A welder carries steel at the site of a construction of a housing project, Thursday, July 31, 2025, in Portland, Maine. More Richard Drew / Robert F. Bukaty/AP Photo In contrast, wages for those in manufacturing, professional and business services, financial activities and construction have slipped noticeably behind inflation. Education has fared the worst, with a 17.9 percent rise in pay trailing inflation by 4.8 percent. Educators have long suffered from the gap between income growth and inflation. According to the National Education Association's most recent annual report, average starting teacher salaries underwent their largest increase in 15 years in 2024. However, the labor union said that, when factoring in inflation, average teacher wages have "actually decreased by an estimated 5.1 percent over the past decade." "Education has lagged the most because even though teacher shortages persist, institutions face far more rigid pay structures," Yildirmaz told Newsweek. "School systems can't easily adjust prices or salaries in the way private employers can, so teacher pay scales tend to move slowly and remain constrained." Gould noted that the inability of wages to keep up has also been a function of the rapid inflation seen between 2020 and 2022, which reached an annualized rate of 9.1 percent in June 2022. This has been attributed to a mix of factors including pandemic-era supply chain shocks, post-lockdown demand surges, as well as the Russian invasion of Ukraine which drove up energy and food prices. What People Are Saying Martha Gimbel, executive director of the Yale Budget Lab, told Bankrate: "A wage increase is something you earn. Inflation is something that happens to you. It feels unfair to people that their hard-earned wage increase is getting eaten up by something that's not their fault." Ahu Yildirmaz, President & Chief Executive Officer of the Coleridge Initiative, told Newsweek: "Looking ahead, demographics and immigration will play a critical role in shaping labor supply. At the same time, the pace of AI adoption will influence demand. In service industries where human interaction is harder to automate wage pressure is likely to remain elevated. By contrast, in sectors more exposed to automation, wage growth may be more restrained." What Happens Next? Bankrate believes wage growth is on pace to match post-pandemic inflation by the third quarter of 2026, at which point its wage-to-inflation index will rise above zero. According to latest CPI report from the BLS, inflation accelerated 0.2 percent in July from June, and is up 2.7 percent on a 12-month basis. The core CPI, which excludes the volatile food and energy categories, increased by 0.3 percent for the month and is up 3.1 percent from a year ago. Most forecasts assume that inflation will remain broadly at this level for the remainder of 2025, the IMF forecasting annual inflation to hold steady at 3.0 percent on average this year. However, experts believe this will depend significantly on the extent to which the effects of President Donald Trump's tariffs are passed onto consumers.
Yahoo
38 minutes ago
- Yahoo
Canada's inflation cools to 1.7% as gasoline prices drop
Canada's inflation rate decelerated to 1.7 per cent in July, from 1.9 per cent the month before, driven by a drop in gasoline prices that reflects the removal of the consumer carbon tax, Statistics Canada said on Tuesday. Gasoline prices were down 16.1 per cent year over year and down 0.7 per cent on a monthly basis after a ceasefire between Iran and Israel and increased supply from the Organization of Petroleum Exporting Countries and its allies. Despite the headline number, seven major components in the consumer price index basket rose in July, Statistics Canada said. Excluding gasoline, CPI rose 2.5 per cent in July, matching increases in June and May. Excluding indirect taxes, inflation accelerated 2.3 per cent last month, down from 2.5 per cent in June. But core inflation, which the Bank of Canada prefers to look at when making its monetary policy decisions, stayed elevated around three per cent. Year-over-year CPI-common rose 2.6 per cent last month, the same as in June, and CPI-median rose by 3.1 per cent, up from three per cent in the previous month. CPI-trim rose by three per cent, the same increase as the month before. Andrew Hencic, a senior economist at Toronto-Dominion Bank, said core inflation is showing signs of losing momentum. 'On a go-forward basis, this report builds on what we saw last month, slowing momentum in core prices as slack in the economy builds,' he said in a note. 'From our lens, we think the Bank of Canada will have room to deliver more easing later this year as the economic slack continues to build and offset inflation pressure.' Despite concerns about trade war disruptions and the impact on pricing, Statistics Canada did not mention any price impacts due to tariffs. Last month, the agency said the uncertainty in global trade had put upward pressure on clothing prices. The Bank of Canada has said it will continue to monitor how tariff impacts are being passed through to consumers. The central bank has held its policy rate during its last three decisions at 2.75 per cent, citing concerns over underlying inflation as one of the reasons. Bank of Montreal chief economist Douglas Porter said the three-month trend in median CPI and CPI-trim has calmed to a 'reasonable 2.4 per cent annualized,' which could set the stage for further rate relief. 'If that more recent pace in core is maintained, and the economy remains soft, we believe that will eventually set the stage for Bank of Canada cuts,' he said in a note. Still, there remain a number of economic data releases before the Bank of Canada's next rate decision on Sept. 17, including second-quarter gross domestic product and job numbers for the month of August. Shelter prices in July rose 2.9 per cent, which was driven by an increase in rent, which rose 5.1 per cent last month, up from 4.7 per cent in June. Mortgage interest costs increased by 4.8 per cent year over year last month, down from 5.6 per cent in June. Mortgage interest costs have been on a downward trend since September 2023. Bank of Canada still unsure where interest rates should land The increase in shelter inflation was also attributed to a smaller year-over-year decline in natural gas prices, with residents in Ontario paying more compared to the previous year. Grocery prices also accelerated last month, rising by 3.4 per cent, compared to 2.8 per cent in June. The main price hikes were in confectionery and coffee due to unfavourable growing conditions for these products. Price growth in grocery prices has outpaced headline inflation for the past six months. Statistics Canada said Canadians paid 27.1 per cent more for food in July than they did in July 2020. • Email: jgowling@ Sign in to access your portfolio
Yahoo
2 hours ago
- Yahoo
Inflation reading won't 'move the needle' for Bank of Canada, says economist
Canada's inflation rate slowed to 1.7 per cent in July, but economists remain in a 'wait and see' mode when it comes to the future of interest rates. Statistics Canada on Tuesday said Canada's consumer price index (CPI) fell 0.2 percentage points from June, largely on the back of a drop in gasoline prices, which declined 0.7 per cent on a monthly basis. Here's what economists had to say about the latest inflation numbers. 'Cleared one obstacle' toward rate cut: CIBC Andrew Grantham, a senior economist at CIBC Capital Markets, said July's inflation numbers show that the Canadian economy is one step closer to another interest cut. 'We have successfully cleared one obstacle on the path towards a potential September interest rate cut,' he said in a note. 'While there is still a lot more data to be released between now and the mid-September (Bank of Canada) meeting (including another CPI release), today's release is supportive of our current call for a 25-(basis-point) reduction at that time.' Easing inflation 'welcome' for BoC: RBC Royal Bank of Canada senior economist Claire Fan said the latest inflation reading will be 'welcome' news for the Bank of Canada, but an interest rate cut is unlikely at its next meeting in September because the underlying numbers are still relatively high and there is other economic data still to come. 'One reading doesn't make a trend and the diffusion index we calculate is still pointing to relatively broad-based inflation pressures across the consumer spending basket in July,' she said in a note. 'As we look not much further for a bottom of conditions, we don't expect the (Bank of Canada) will cut again in this cycle.' Inflation still 'too firm' for cuts: Oxford Economics Michael Davenport, senior Canada economist at Oxford Economics Ltd., said the inflation numbers, while lower than in June, don't move the needle when it comes to an interest rate cut in the near future. 'Most measures of core inflation also edged down last month, but underlying inflation likely remains too firm for the Bank of Canada to be comfortable cutting rates in September,' he said in a note. 'With trade policy uncertainty still elevated and underlying inflation running too hot for the (Bank of Canada)'s liking, we expect it will continue to hold the policy rate steady at 2.75 per cent on Sept. 17.' Davenport also predicts that Canada's relief from inflation will be short-lived as the effect of United States tariffs begins to take hold. 'We expect both headline and core CPI inflation will continue to creep up in the near term as costs from the trade war and Canadian counter tariffs gradually pass through to retail prices, particularly once most temporary counter tariff relief ends in mid-October,' he said. Rate cut 'back into the fold': Capital Economics Bradley Saunders, North America economist at Capital Economics Ltd., said the soft inflation data brings back the possibility of an interest rate cut in September, provided the remaining economic data points favourably toward a cut. 'A September rate cut is certainly on the cards, though policymakers will probably want to see further signs of a sustained economic slowdown in forthcoming GDP and labour market data before they commit,' he said in a note. Canada's inflation cools to 1.7% as gasoline prices drop Bank of Canada still unsure where interest rates should land 'We are wary of the hawkish comments published in the Summary of Deliberations from July's (Bank of Canada) meeting last week and will need to see greater evidence of a sustained economic slowdown in the forthcoming (gross domestic product) and labour market data, due before the (central bank) next meets, before we can be sure.' • Email: bcousins@ Sign in to access your portfolio
