We got the latest inflation numbers — the Consumer Price Index — for October this morning. CPI increased 0.2% month over month, and prices were 2.6% higher in October than they were a year ago. For the most part, the pace of price gains has been gradually slowing since inflation hit a pandemic-era peak of 9% in June 2022. 

But wages have also been increasing at a pretty steady pace. Average hourly earnings growth surpassed the rate of price growth back in May 2023, which means Americans’ real earnings have been improving. 

In October, average hourly earnings rose 4% from the year before. Which means, even after accounting for inflation, Americans had over 1% more disposable income to spend. 

And that is certainly helping to keep economic growth strong, said Ted Rossman at Bankrate. 

“Consumer spending — you know, people are continuing to spend,” he said. But, “they’re not feeling great about things.”

Partly because prices are still high, and not really coming down. 

And, even if consumers do the math, and figure out their paychecks have gone up more than their grocery bills lately, “I don’t think most consumers are feeling that,” said Chris Jackson at polling firm Ipsos.

Jackson tracks consumer attitudes. He says they aren’t feeling it partly because of how they think about economic cause-and-effect.  

“If their salary has gone up, it’s because of some unique specialness that they have that has earned that money. And if prices have stayed high, that’s the market being unfair to them,” he said.

And, the “wages-to-prices” equation still looks pretty bad if you go all the way back to the beginning of the recent inflation spike, says Bankrate’s Ted Rossman. 

“Prices have grown a total of about 20% since the beginning of 2021, and wages have gone up 17% on average during that span,” he said.

Meaning, even if wages are outpacing price increases now, go back several years, consumers are still playing catch-up to inflation.