Inflation surprise: Wage gains eclipse price spikes

The war on inflation may be far from over, but the economy has reached a key, little-noticed milestone: Workers wage gains are finally outpacing the rise in consumer prices.

Americans average income has beaten inflation for the past six months, driven by the plummeting cost of gas, along with drops in furniture, cars and other goods. If the trend continues, it could be a boost for President Joe Biden as he gears up for a tough reelection campaign, undercutting one of the main Republican arguments against his handling of the economy.

People really know how far their paycheck goes, Jared Bernstein, a member of Bidens Council of Economic Advisers, said in an interview. When gas prices are down $1.70 relative to where they were last summer, thats the kind of breathing room that people recognize.

Yet that progress could be in jeopardy: As Federal Reserve officials prepare to meet next week to raise interest rates again, their inflation-fighting crusade which Fed Chair Jerome Powell has vowed to continue has sparked fears of a recession, meaning that workers could be forced to give up those hard-fought gains.