In the NYT's Upshot section Neil Irwin correctly notes that real wages have been nearly stagnant in the recovery, however he makes too much of the inflation numbers from the last couple of months. The Bureau of Labor Statistics reported that inflation rose 0.3 percent in April and 0.4 percent in May. These increases were enough to wipe out modest real wage gains reported in prior months so that the average hourly wage has now fallen slightly over the last year, adjusted for inflation.

While this is bad news, it is wrong to make too much of the drops reported for April and May, as opposed to the modest growth reported in prior months. The higher inflation reported for April and May were largely attributable to unusually large price increases for food and energy. These prices are highly erratic and are likely to be reversed in the months ahead. (Food prices rose at close to a 6.0 percent annual rate over the last two months, compared to a 2.5 percent rate over the last year. Energy prices rose at more than a 7.0 percent rate compared to a 3.3 percent rate over the prior 12 months.)

If these price rises are reversed in the months ahead, which is likely, then we will be back on the path of very weak real wage growth. It will still be the case that workers are seeing very little of the benefit from the recovery, but the number will not be zero.

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