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The economic reopening and resulting surge in spending have driven inflation to dizzying highs. Bolstered savings have run up against rampant supply shortages, leading to outsized demand and higher prices.
At the same time, the unusual labor shortage has powered extraordinary wage growth. Companies struggling to rehire have jacked up starting pay in a bid to attract workers, with the largest raises seen in sectors hit hardest by the pandemic, such as leisure and hospitality. That's resulted in the biggest jump in wages since at least 2001.
It's still not enough. The Personal Consumption Expenditures price index — among the country's most closely watched measures of inflation —, exceeding economist forecasts and placing year-over-year price growth at its fastest pace since 2008. On a six-month annualized basis, prices are up more than 5%. That more than eclipses the multi-decade high wage growth of roughly 4.3%, essentially leaving Americans with even less purchasing power than they had previously.
"The concept of transitory is really this: It is that the increases will happen. We're not saying they will reverse," he said."I don't mean that producers are going to take those price increases back. That's not the idea." Instead, it means prices won't continue to grow at the current pace. Similarly, healthier pay growth is also set to stick around. Stimulus support throughout the pandemic left Americans
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