Real Income Growth Trends: Insights from the JP Morgan Chase Institute's Latest Report

The recent labor market data has led to varying perspectives on real income growth trends, and the topic has received a lot of attention due to its connection to consumer confidence.

The JP Morgan Chase Institute has recently released a report titled "Checking in on Real Incomes after February Labor Market Data," which provides a closer look at this topic.

The report examines two government data releases on wages: Average Hourly Earnings (AHE) and the Employment Cost Index for Wages and Salaries (ECI). Both indicators show real wage gains in the past year, although there are fluctuations due to the labor market volatility caused by the pandemic.

The report also takes a within-person perspective that looks at take-home pay and income inflows from government programs like Unemployment Insurance and Economic Impact Payments. The data show that lower-income groups have benefited the most from labor market tightening.

As for the current status of real incomes, recent Institute Cash Pulse releases show that cash outflows are closing in on inflows, slowing the decline in median balances. However, smaller liquid buffers provide households with less wiggle room than any point since early 2020.

The report notes that real income gains differ depending on income quartiles, as lower-income individuals tend to have higher real incomes than those with higher incomes.

This outcome is consistent with recent research on the topic, which suggests that even after fiscal stimulus has faded, individuals with lower incomes have sustained their relative gains.

Overall, the report concludes that while real income growth has been positive in the past year, fluctuations caused by the pandemic have made it difficult to determine where workers stand relative to a stable benchmark. It highlights the need for further examination and monitoring of this important economic concept.

In conclusion, the JP Morgan Chase Institute's report provides key insights into real income growth trends and highlights that lower-income individuals have benefited the most from recent labor market tightening.

While real income gains have been positive, the impact of the pandemic has made it difficult to determine where workers stand. The report emphasizes the need for ongoing monitoring and closer examination of real income growth to ensure households' financial strength and support the U.S. economy's solid growth outlook.