via Jared Bernstein's Blog

Along with the national and regional statistics economy-trackers follow, I find it useful in my travels to talk to people on the ground.  If you want a general feel for the local economy, ask around and—discounting for the non-random, convenience sample—you can often get a pretty good idea.

The sense I get from folks is that while they sense that things are getting a bit better and they’re more hopeful than they were in the recent past, they’re not quite feelin’ the love.  Higher gas prices are definitely a big part of the mix—cabbies are overweighted in my sample—but a lot of folks feel like the recovery hasn’t quite reached them yet.  

I think this is one of the reasons: it’s a plot of the annual percent change in real weekly earnings, net of any non-wage benefits.  Take out taxes (and add in the payroll tax cut) and this is what’s happening to real paychecks. 

Source: BLS

And, as you can see, they aren’t going as far they were a year ago.  As the table below shows, that’s largely a function of faster inflation.  The table decomposes the growth in weekly earnings into three parts: inflation (which subtracts from real wage growth), hours’ growth, and hourly wage growth.

Hours continue to grow as the expansion gains pace, but they’ve decelerated a bit.  The nominal hourly wage has been trucking along at around 2%.  But faster price growth is sucking more out of your paycheck’s buying power than it was a year back.

Obviously, the gas price spike is a big part of the story, but it’s also the case that 8.3% unemployment is a signal of a slack labor market.  And in slack labor markets, there’s little pressure on hourly wage growth.

So if things don’t feel that great to a lot of working people right now, there’s a reason: they’re still struggling.