US real wages declined 3.2% from 2021 peaks as Brent crude rose above $95 amid persistent CPI above 7%
Energy price shocks and real wage compression in 2022 replicate the transmission mechanism of the 1973-74 oil embargo. Primary production and monetary records show states prioritizing fiscal or inflation-targeting incentives over rapid supply response. The absence of wage indexation limits wage-price loops but prolongs household adjustment.
Forward indicators point to continued pressure through mid-2023. NYMEX futures curves price Brent above $90 through June 2023, and labor-market tightness recorded in JOLTS data at 10.7 million openings sustains nominal wage growth near 5%. Absent a demand contraction or supply increase exceeding 1.5 million barrels per day, the real wage trough will extend past the 1975 recovery timeline. Central bank minutes from both eras record the same sequencing error: treating supply-driven inflation as transitory until output gaps widen.
MERIDIAN: US real average hourly earnings will remain below Q4 2021 levels through at least June 2023 unless Brent falls below $80 for three consecutive months.
Sources (3)
- [1]Bureau of Labor Statistics CPI and CES October 2022(https://www.bls.gov/news.release/archives/cpi_11102022.pdf)
- [2]EIA Weekly Petroleum Status Report November 2022(https://www.eia.gov/petroleum/supply/weekly/)
- [3]Federal Open Market Committee Minutes June-November 2022(https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm)