Financially speaking, the past several years have been tumultuous for American consumers.
As inflation and the cost of living keeps rising, Americans are struggling to keep their heads above water. The exact numbers vary, but sources report that more than half of Americans (somewhere between 55% to 63%) are living paycheck to paycheck today.
Kathryn Wilson, Ph.D., professor of economics at Kent State University, was recently interviewed on the “Ray Horner Morning Show” on WAKR to share her insights on what’s happening with the economy right now and what to expect in 2024.
As Wilson explains it, things may be looking up.
LISTEN TO WILSON'S INTERVIEW WITH WAKR.
“The job market is holding up really strongly,” Wilson said. “We have near record-low unemployment rates. As an economist, part of what I’m excited about – in terms of the labor market – is there’s also a lot of people who are working. We look at not only the unemployment rate but also the labor force participation rate – what percent of adults in America are participating in the labor force. And those numbers have come back up to look really strong. So, we have a lot of people who are working, we have very low unemployment, and those inflation numbers seem to be coming down.”
Wilson said, overall, the bigger economic picture looks good. Wages, particularly for lower-income workers, are rising faster than those with higher incomes, which is unusual, she said. Yet, despite this, more than half of Americans are still living paycheck to paycheck. Wilson explained that 2022 was the most challenging year for American consumers because while the government subsidies that helped people out during the pandemic were ending, inflation rates began to rise.
“Wages went up about 5% in 2022, but inflation was closer to 8%,” Wilson said. “That means your paycheck isn’t buying as much. So, I think 2022 was a rougher year for families to try and stretch their budget because money wasn’t going as far with the high inflation.
“In 2023, things look a little better,” she said. “As inflation comes down, the other key number I’m looking at is what’s happening to wages. So far in 2023, wages are continuing to grow at around 4.5%. That’s faster than what we are seeing with inflation. I think if this trend continues for the next year or so, increases or raises that we’re seeing are going to outstrip inflation, then people start feeling like they can loosen their belts a little bit.”
In the interview, Wilson goes on to share her thoughts on the housing market, what’s ahead for 2024 and how an election year may or may not influence the economy.
Learn more about Kent State's Department of Economics.
Top photo credit: Image by Andrew Khoroshavin from Pixabay