Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / How Your Raise Is Finally Beating Appliance Prices
Transcript
- Lucas: So you know how every time you walk into a home improvement store, a basic refrigerator feels like it costs the same as a used car? Luna: I literally just had that experience last weekend. I nearly fell over when I saw the sticker on a mid-range Whirlpool. Lucas: Right. But here's the thing — if you look at the data over the last year, that experience might actually be starting to change. Average hourly earnings for private workers hit $37.50 in May, according to the Bureau of Labor Statistics. That's up about 4.5 percent from a year ago. Luna: And appliance prices? The May CPI data we got last week shows they're up only about 1.8 percent year-over-year. So wages are beating appliances by a solid margin. Lucas: Exactly. And it's not just a one-month fluke. This gap has been widening for three quarters now. For the first time since the pandemic supply chain mess, your raise is actually outstripping the cost of a new dishwasher or oven. Luna: So what changed? Because I remember 2021 and 2022 when appliance prices were spiking double digits. Lucas: A few things. First, supply chains normalized. The container ship backlog cleared, semiconductor shortages eased, and manufacturers caught up. Second, demand softened — people did a ton of home upgrades during the pandemic, so now they're pulling back. The National Association of Home Builders says spending on major appliance replacements is down about 8 percent from the 2023 peak. Luna: That makes sense. And on the wage side, we've got a tight labor market still pushing pay up. The Employment Cost Index for wages hit 177.5 in the first quarter, up nearly 5 percent annualized. Lucas: Right. So you've got this nice convergence: wage growth staying hot, appliance inflation cooling off. For the typical household, that means your paycheck goes a little further when you need to replace a broken fridge or a washing machine. Luna: Which is not nothing, especially with overall CPI still running at 4.2 percent. People feel like everything is more expensive, but some categories are actually becoming more affordable in real terms. Lucas: And that's the kind of granular detail we try to bring to you every week — not just 'inflation is high' or 'wages are up,' but where those numbers actually meet your life. If walking through the economy with us has made something click, a couple of dollars a month is genuinely what keeps these going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. Luna: Yeah, it's a small way to keep the show ad-free and focused on the data that matters. We really appreciate it. Lucas: Alright, back to appliances. So the other interesting piece is that not all appliances are created equal. The CPI data shows laundry equipment prices are actually down about 0.3 percent year-over-year. Refrigerators are still up but only about 2.1 percent. Cooking ranges are the stickiest — up around 3.5 percent. Luna: Why the difference? Is it just about which components are still constrained? Lucas: Partly. Ranges use more specialty steel and electronic controls that have been slower to come down in price. But also, demand for ranges is tied more to new construction and major kitchen remodels, which are still happening at a decent clip. Laundry machines are more replacement-driven, and people are willing to wait for a sale or buy a cheaper model. Luna: That aligns with what I've seen anecdotally. A friend of mine recently replaced her washer and dryer — she said she got a deal because the store had excess inventory from last year. Lucas: Exactly. Retailers are discounting more aggressively. Best Buy and Home Depot have both mentioned in recent earnings calls that they're running more promotions on major appliances to move stock. That's a direct benefit for consumers. Luna: So for someone listening who's been putting off buying a new fridge because they assumed it would just get more expensive, the message is: now might actually be a decent time. Lucas: I think that's fair — especially if you factor in wage growth. If your income has gone up 4.5 percent and the fridge you want has gone up 2 percent, you're coming out ahead. That wasn't the case two years ago when fridge prices were up 12 percent and wages were up 5. Luna: Right, and that real wage gain in the appliance category is a tangible win. It's small, but it's real. Lucas: And it's part of a broader trend we're seeing in goods versus services. Goods inflation has cooled significantly — core goods prices are actually down year-over-year in some categories. Services inflation is stickier, especially rent and medical care. So the stuff you buy at the store is getting more affordable, while the stuff you pay for monthly is still climbing. Luna: Which means the story isn't all good. But for today, we wanted to highlight a bright spot that often gets overlooked. Lucas: Yeah, because it's easy to get caught up in the headline CPI number and feel like everything is terrible. But when you dig into the details, there are real pockets where workers are gaining ground. Luna: And that's the kind of insight we'll keep bringing you. Thanks for listening.