Americans are expecting to see the biggest wage gains in years.
U.S. consumers think that earnings will rise 2.73 percent this year, according to results from the New York Fed’s monthly survey. That is up from December’s expectation of 2.67 percent and is the highest expected wage growth since the Fed’s survey began in 2013.
The Fed describes this as an expectation of “robust earnings growth.”
The sharpest rise in expected income came from consumers earnings $50,0000 or less. In December, consumers at this income level forecast two percent wage growth. In January, this moved up to 2.81 percent. Consumers earning between $50,000 and $100,000 foresee 2.61 percent growth, up from 2.54 percent in December. The wealthiest households pulled back their expected wage gains to 2.83 percent from 3.0 percent.
These figures suggest that Americans do not believe claims that the benefits of the recent tax cuts will accrue only to corporations or the wealthy. There may be some political risk for the Trump administration and Republicans in the numbers: if wage gains fall short of expectations, consumers could find themselves angry at the leaders who failed to deliver.