The first batch of releases in our US economic data marathon today painted a fairly optimistic picture for the US, with CPI inflation rising 2.5% from January last year, core inflation rising 2.3% over the same period and retail sales up 0.4% from what was already and strong December, made even better by the upward revision to 1%. Under the circumstances, it’s no surprise that the US dollar has rallied on the back of these numbers as all exceeded expectations and should feed into the narrative that the economy is improving and the Fed should continue raising rates.
However, the lesser followed release, real average weekly earnings, was not so impressive falling 0.4% and continuing a potentially worrying trend that has materialised over the last year.
The full US real earnings report from the BLS can be found here.
We’ve all been relieved that average hourly earnings have, broadly speaking, been improving, but with inflation now ticking higher and the average workweek having fallen over the last year, consumers may not be as well off as we hoped.
