According to the U.S. Bureau of Labor Statistics, consumer prices rose by 3.4% year-over-year in August, while average hourly earnings increased by 3.1%. When adjusted for inflation, the real average hourly wage fell by 0.1% compared to the previous month and by 0.3% since August 2025.
Heather Long, chief economist at Navy Federal Credit Union, noted that April marked a shift in the trend, as wage growth had previously outpaced inflation for an extended period. The recent reversal is attributed to a spike in energy costs throughout the current year.
Data from the PYMNTS Consumer Expectations Index indicates that 53% of Americans living paycheck-to-paycheck who struggle with bills reduced their nonessential spending over the past year. Conversely, 23% of this group reported an increase in such spending.
Among consumers living paycheck-to-paycheck who manage to pay their bills without difficulty, 41% cut back on nonessential expenses, while 27% increased them. Only households not living paycheck-to-paycheck showed more spending increases than reductions, with 30% spending more and 27% spending less.
