The Pomp Letter
The Pomp Letter
Government Says People Better Off Now, Yet People Disagree

Government Says People Better Off Now, Yet People Disagree


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To investors,

Treasury Secretary Janet Yellen participated in an exclusive CBS interview last night about the US economy. When asked whether she and President Biden were happy with how inflation is going right now, Yellen said the following:

“We know that Americans are experiencing discomfort because some important prices are higher than they were pre-pandemic, but what I think is really important is that wages have gone up along with prices, so people are better off than they were pre-pandemic.”

This seems like a difficult talking point to continue reiterating because majority of the population disagrees. Only 14% of American voters say they are better off financially under the current administration. So 86% of citizens believe they are the same or worse than when Biden took office.

To Yellen’s credit, wages did rise from 2020 to 2022. Just as the price of goods and services increased with higher inflation, wages went up too. But as inflation has come down, wage growth has come crashing down too. Here is the overall unweighted wage growth since the 1990s from the Federal Reserve Bank of Atlanta:

The same wage growth decline is present for hourly workers as well. The trend has not discriminated in who it is affecting.

So why is this important?

Wage growth is slowing and it appears that things are going to erode for many citizens. We can use real wage growth as a measurement to understand the difference between inflation and wage growth. Here we can see that Americans experienced negative real wage growth for majority of 2021 and 2022.


Real wage growth had improved for 7 straight months as inflation year-over-year came down to more manageable levels. But with the re-acceleration of inflation in the January 2024 numbers, real wage growth has turned negative again. This spells disaster for the average citizen.

For approximately 2 years, Americans saw inflation outpace the growth in their wages. The prices that were increased are not going to come back down, plus the current annualized inflation rate from January’s number is over 3.5%, so unless an employer is planning to give employees a 4-5% raise each year it will be unlikely that wages can keep up.

Secretary Yellen, President Biden, and others want to tell a story of a strong economy that is creating more opportunity for the population. Words fall on deaf ears though if the story is not true.

The countdown has begun till the election. They have less than 9 months to get things turned around or many voters will enter the ballot box and vote based on their wallets.

Cut rates. Print money. Get liquidity into the system. Make voters flush with cash. If you wanted to enhance President Biden’s chances of winning in November, that would be the playbook. The Fed and Treasury claim to make decisions regardless of the political outcomes, but we will see what happens in the coming months.

Hope you all have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

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