Consumer prices climbed 3.4% in August. Wages rose 3.1%. Americans are now 0.3% worse at affording things than they were last year. Financial analysts call this a squeeze. Normal people call it getting f*cked with a calculator.
The gap sounds small until you remember it compounds on every single thing you buy. Groceries. Rent. Gas. That sandwich you convince yourself is lunch and not financial surrender. Every transaction is a tiny auction where your paycheck shows up underbidded.
Retail traders saw this headline and immediately checked their portfolios to see if their seventeen shares of a penny stock somehow hedge against milk costing more. They do not. The stocks are also down. The milk is still expensive. The trader is now lactose intolerant by necessity.
Economists will explain that 0.3% is within normal variance. They will cite historical precedent. They will use words like transitory and normalization. None of these words pay for your groceries. None of these economists are skipping meals to make rent. They are simply explaining why you should feel fine about being poorer.
The technical setup here is pristine. Draw a line from your paycheck to your expenses. Notice the gap widening. That is called a bearish divergence in your standard of living. The breakout already happened. You missed it. You were on the wrong side.
Some workers will ask for raises to match inflation. Their bosses will explain that the company is tightening belts. The boss will explain this from his second home. The belt he is tightening is yours. His fits fine.
The inflation rate and the wage growth rate are now moving in opposite directions relative to your ability to buy shit. Technical analysts call this a cross. Everyone else calls it exactly what it feels like when your money buys less and your boss says there is no budget for more.
Photo by Marek Studzinski on Unsplash
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