12/09/2025
Wage growth has been outpacing consumer prices for the past 3 years. Yet most people are not feeling it and have consistently expressed negative economic sentiments.
The reason is that everything is more expensive by 28.4% from the pre-covid period. The cumulative wage gains over the same period has been 32.9%. Those exact figures are not computed by a normal person, rather they are seeing the near 30% price gains in their everyday experience. Had inflation not popped in 2022, the cumulative price gain over a comparable period would be about 10%, not really noticeable from a year to year.
As to home prices, it is finally cooling into near zero growth after the supersized gains in the early covid years. The consistent future income gains will make homes more affordable. But the improvements in housing affordability is still marginal because the mortgage rates have a much greater influence on housing affordability. Decline in mortgage rates will therefore be the key to future housing affordability along with adequate housing supply to keep home prices at calm levels.
