Americans are getting smaller pay raises while tariffs and higher gas prices are threatening to make everything more expensive.<\/p>\n
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Translation: The affordability problem isn\u2019t improving.<\/p>\n
New government data released<\/a> Friday showed non-supervisory workers getting a 3.4% pay raise on average hourly earnings over the last year. That\u2019s the slowest pace of wage gains since 2021, and a downshift from the last two years, when pay bumps were closer to 4%.<\/p>\n The slowdown comes as economists worry about rising inflation, with the Iran war choking off oil tankers and pushing gas prices up over $1 per gallon in just a month, to a national average of $4.09 on Friday.<\/p>\n As diesel costs break $5.50 a gallon (compared to just $3.89 a month ago), retailers and grocers are now contending with higher transportation costs. Amazon said Thursday it will begin charging sellers a 3.5% \u201cfuel and logistics-related surcharge\u201d beginning on April 17. <\/p>\n Airlines like United and JetBlue are raising bag fees in an effort to offset sky-high jet fuel costs. The International Air Transport Association says the price of jet fuel<\/a> is up 104% in the past month.<\/p>\n \u201cWith the recent uptick in inflation driven by energy prices, real wage growth is likely to decelerate further, putting increased pressure on consumers,\u201d said Thrivent\u2019s chief financial and investment officer, David Royal.<\/p>\n For now, Americans are still seeing their earnings rise at a faster pace than the increase in price tags at the store. As pay rose by 3.4%, the most recent inflation data<\/a> showed prices rising by 2.4% year-over-year.<\/p>\n Wage gains for non-supervisory employees \u2014 a category that includes roughly four out of every five non-farm workers \u2014 have been outpacing price increases since March 2023, when post-pandemic inflation finally began to cool. <\/p>\n But the concern is that the story could change soon. Because of the bump from oil prices, Navy Federal Credit Union Chief Economist Heather Long said it\u2019s possible inflation could pace at 4% this month.<\/p>\n \u201cFour percent is above that 3.5 percent annual wage gain, and that\u2019s where you see a lot of squeeze on workers, particularly middle-class and moderate-income workers,\u201d Long said.<\/p>\n Warning signs are flashing that slowing wage growth could ripple beyond the gas station and prices at the grocery store. Higher mortgage rates now have some worried about icing out even more potential homebuyers.<\/p>\n The average 30-year fixed mortgage rate rose from 5.99% at the start of the war to 6.45% on April 3, according to Mortgage News Daily<\/a>. The rise is due in part to concerns that the Federal Reserve will have to raise interest rates to tamp down on war-driven inflation.<\/p>\n \u201cWith choppy job growth, weaker labor-force attachment and rising uncertainty, many households \u2014 especially renters and first-time buyers \u2014 could become more cautious as weaker inflation-adjusted wages erode recent affordability improvements,\u201d said Zillow senior economist Orphe Divounguy.<\/p>\n If wages can\u2019t keep up with rising costs across the board, it\u2019s likely that affordability will become a larger issue than it already was prior to the war. An NBC News poll conducted during the first week of the war with Iran found that, for a plurality of respondents, inflation and the cost of living was the most important issue<\/a> facing the country.<\/p>\n Economists feel the same way.<\/p>\n