What falling wage growth says about where the U.S. economy is heading

Personal FinanceWhat falling wage growth says about where the U.S. economy is headingSoaring gas prices mean inflation could soon outpace most Americans' pay raises. "That’s where you see a lot of squeeze on workers," said one economist.Listen to this article with a free account00:0000:00Add NBC News to GoogleSurcharges hit consumers in economic fallout from war with Iran02:02Get more newsLiveonShareAdd NBC News to GoogleApril 4, 2026, 4:11 PM EDTBy Brian CheungAmericans are getting smaller pay raises while tariffs and higher gas prices are threatening to make everything more expensive.Subscribe to read this story ad-free Get unlimited access to ad-free articles and exclusive content.Translation: The affordability problem isn’t improving.New government data released Friday showed non-supervisory workers getting a 3.4% pay raise on average hourly earnings over the last year. That’s the slowest pace of wage gains since 2021, and a downshift from the last two years, when pay bumps were closer to 4%.The slowdown comes as economists worry about rising inflation, with the Iran war choking off oil tankers and pushing gas prices up over $1 per gallon in just a month, to a national average of $4.09 on Friday.As diesel costs break $5.50 a gallon (compared to just $3.89 a month ago), retailers and grocers are now contending with higher transportation costs. Amazon said Thursday it will begin charging sellers a 3.5% “fuel and logistics-related surcharge” beginning on April 17. Airlines like United and JetBlue are raising bag fees in an effort to offset sky-high jet fuel costs. The International Air Transport Association says the price of jet fuel is up 104% in the past month.“With the recent uptick in inflation driven by energy prices, real wage growth is likely to decelerate further, putting increased pressure on consumers,” said Thrivent’s chief financial and investment officer, David Royal.For now, Americans are still seeing their earnings rise at a faster pac...