Average hourly wages in the United States return to 2025 levels as inflation erodes recent gains

Inflation-adjusted average hourly earnings have fallen to roughly the same level they were at in January 2025, when President Donald Trump began his second term, after a brief rise earlier in the year. Federal data show the inflation-adjusted hourly wage was $35.84 in January 2025 and $37.81 in September, essentially unchanged over the past 20 months.

The Bureau of Labor Statistics reported that the consumer price index rose 3.7% year-over-year in September, slightly above the 3.6% forecast and higher than August’s 3.4% increase. >"We read the September CPI report as another piece of evidence that the US is facing a persistent inflation problem," economists at BNP Paribas wrote in a client note.

Higher fuel costs, with gasoline up 9.1% from the previous month, have contributed to the erosion of wage gains. Heather Long, chief economist at Navy Federal Credit Union, said the rise in consumer prices since 2025 has wiped out nearly all wage growth, noting a contrast with President Trump’s first term when wages rose over 15% against about 8% inflation. >"It helps explain the frustration many households feel right now with the economy," Long added.

Consumer sentiment has also declined, with the University of Michigan index falling to 46.3 in October from 71.7 in January 2025. Joanne Hsu, director of the survey, linked the drop to higher gas prices tied to the Middle East conflict.

Economists note that while hourly wages have stagnated, average weekly earnings have risen faster because workers are logging more hours. The White House highlighted this trend, with spokesperson Matthew Middleton stating, "Under President Trump, private sector workers have seen their wages continue to outpace inflation, with average annual earnings growing by more than $600."

A recent survey by the Economic Innovation Group and Echelon Insights found that 45% of workers prioritize lowering the cost of everyday essentials, and 23% emphasize affordable housing ahead of the upcoming midterm elections. Long observed that grocery price growth slowed to 1.8% year-over-year in September, though she warned that higher diesel and transport costs could push food prices higher later.

Producer price data released later in the week showed a 1.3% rise in final-demand prices in September, the strongest increase since 2022, suggesting further inflationary pressure.