According to Federal Reserve Chair Jerome Powell, those wage increases Americans have been getting in recent years will need to slow down in order for inflation to get under control.
Powell has said the Federal Reserve's goal is to get the annualized rate of inflation to 2%. Based on the latest consumer price index, inflation stood at an annual increase of 3.2% in July 2023. Meanwhile, average weekly earnings increased 3.5% from July 2022 through July 2023. While Powell noted that there has been some decrease in wage pressures, progress needs to continue.
The Bureau of Labor Statistics noted that the U.S. workforce participation rate increased to 62.6% in July 2023, compared to 62.1% in July 2022. That has resulted in 3 million more people in the U.S. workforce this year compared to last year. "While nominal wage growth must ultimately slow to a rate that is consistent with 2% inflation, what matters for households is real wage growth.