ICYMI: Ten Charts That Explain the U.S. Economy in 2023—Chart 7: Real Wages Grew and Wage Inequality Fell

The U.S. economy defied expectations this year. Many forecasters predicted a recession, some even asserting a "100%" probability of a recession. President Biden never believed that was necessary—and he was right.

Instead of a recession, inflation is down to 2% over the last six months, unemployment has stayed below 4% for 22 months in a row, and wages, wealth, and income are all higher now than they were before the pandemic began. While there is more work to do—from lowering prescription drug and energy costs to cracking down on price gouging by banning hidden junk fees and calling on corporations to pass savings on to consumers—this year has brought remarkable progress.

The Council of Economic Advisers is highlighting ten charts that capture the most important economic developments of the past year. They depict an economy growing from the middle out and bottom up—powered by Bidenomics.

Chart 7:

Real wages grew and wage inequality fell.

Real wages began to grow in 2023 as inflation fell from its 2022 peak and workers received robust nominal wage gains. In the year ending in November, real wages grew by about 0.8 percent for all workers and 1.1 percent for the 80% of workers who are production and non-supervisory workers. Further, wage inequality fell. The ratio of wages at the 90th percentile compared to the 10th percentile fell by nearly 6 percent over the year. One reason to continue to be optimistic about this trend in 2024 is the historic union activity and wins in 2023. Strong unions help grow the economy by reducing inequality and raising incomes.

Read the full blog here.