Key facts
- Inflation has surpassed 4%, with gas prices and other consumer goods costs rising.
- Wage growth has fallen behind price growth for the first time in three years.
- Cumulative inflation over five years has reached 24%, eroding purchasing power for many.
- Idaho and Mississippi are among states where wage growth has outpaced inflation.
- New York, California, and Maryland show the weakest wage growth relative to inflation.
Inflationary pressures are re-emerging, with rising gas prices and increased costs for many consumer goods pushing inflation back above 4%. This marks the first time in three years that price growth has outpaced wage growth, creating significant challenges for middle-class households.
Over the last five years, the average national inflation rate has been 4.8%, leading to a cumulative inflation of 24%. Many individuals have not experienced commensurate wage increases, resulting in a decrease in their real earnings. Economists suggest this could be indicative of a K-shaped economy, where wealth concentrates at the top while others see their spending power diminish.
Analysis from MoneyLion indicates that residents of smaller states and those in the South have generally navigated these economic conditions more favorably. For instance, Idaho has seen weekly earnings rise by approximately 39% over five years, significantly exceeding the 24% cumulative inflation rate. The median household income in Idaho reportedly increased from about $49,000 in 2021 to $68,000 in 2026.
Conversely, states like New York, California, and Maryland have experienced the weakest wage growth in comparison to inflation. In Maryland, typical wages grew by only 12% over five years, while California saw 14% growth and New York experienced 16% growth, indicating a substantial loss of purchasing power for residents in these areas.