In the last two weeks many consumer-facing companies have reported quarterly earnings results. On average results have exceeded expectations but several cite lower demand for their products because of economic pressure on the consumer. This economic pressure likely impacts lower-income consumers the most. That’s why we look at the real purchasing power of these consumers as it might give us a clue about their economic wellbeing. In the US, average hourly wages in the five lowest-paid sectors have almost kept up with the consumer price index (CPI) since January 2020 i.e. their real purchasing power has not deteriorated materially. And things are improving. In June this year, average hourly earnings increased more than inflation in all of the five lowest-paid sectors.
Source: US Bureau of Labor Statistics, 2023.