Not surprisingly, the loosening of the Oil choke collar appears to be having a number of virtuous side effects. The price of gas continues to be lower than it was in 2013, 2012, and even 2011 at this time.
Since changes in the price of gasoline are almost entirely responsible for the month to month deviations from the "core" inflation rate of roughly 1.5% a year, the YoY slow decline in gas prices has caused YoY consumer inflation to decline from nearly 3% 2 years ago, to between 1% and 1.5% recently.
Here's the graph of YoY CPI siince January 2012 showing that decline:
And here is an overlay of gas prices (red), adjusted by 1.5% core inflation and scaled for easier comparison:
The correlation between the slow fade in gas prices and the deceleration in the CPI is obvious.
Now, let's take a look at the month over month percentage change in the nominal (i.e., not inflation adjusted) average wage of nonsupervisory workers over the last 2 years:
Over the last 5 months in particular, the monthly increase in average wages has signficantly picked up. This suggests that the decline in the U3 unemployment rate to nearly 6% is real, since there is evidence at last of some slight upward pressure on wages.
This upward pressure on wages (to a whopping 2.5%, still over .5% less than at its worst point before the last recession), is evident on this next graph, which shows the YoY% change of both the CPI and average nonsupervisory wages since October 2010:
Finally, as both a result of the deceleration in consumer inflation due to the loosening of the Oil choke collar and the recent acceleration in nominal nonsupervisory wages, here is average wages for nonsupervisory workers, normed to 100 at their peak in Octrober 2010:
Since last summer there has been marked improvement in the trajectory of real wages. We are within 1% of the October 2010 peak, and if the current trend continues. we may finally set a new record high for real wages by the end of this year.
Maybe not worth 3 cheers, but 1 1/2 cheers at least.
