LANSING, Mich. (WZMQ) – New reports are putting a living wage at $25/hour in the state of Michigan. The cost of living around the U.S. has been on the rise since 2020, since 2008, the Consumer Price Index has increased by around 80 points. Over 12 years, from 2008 until 2020, the U.S. saw a 40-point increase in the cpi, from about 220 to 260. In just the past 4 years, we’ve seen the CPI rise the same amount, to about 300.
This acceleration started raising concerns from economists, who predicted that a recession was only a matter of time.
With rising inflation accelerating over the pandemic, it was expected that the U.S. would hit a recession that economists are now saying might be avoidable.
Antonio Doblas-Madrid, an associate professor of economics at Michigan State University said that with the Federal Reserve increasing interest rates, a banking crisis, a new war in the Middle East on top of the existing war between Russia and Ukraine, a debt ceiling crisis, and the slowing down of the Chinese economy, a recession seemed inevitable.
He said that now, while it would take a lot of time for the economy to cool down slowly enough to avoid a recession, it could still be possible.
“We have seen a substantial spike in inflation in the last. 2 1/2 to three years,” Doblas-Madrid explained. “In 2022, the economy seemed doomed to are doomed to a recession, and nevertheless the GDP numbers looked quite strong.”
Between March 2022 and July 2023, the Fed raised interest rates 11 times to curb inflation. The Fed has held rates around 5%, and in December said the goal for 2024 is to lower that to 4.6%.
Doblas-Madrid also explained that while living costs have gone up 3 fold in the past 40 years, wages have not.
“The median wage in the last 40 years has increased, but the price level has increased threefold,” Doblas-Madrid said. “The wage adjusted for inflation has only increased like maybe 10 to 15%.”
ZipRecruiter studies show the average salary in Michigan is around $49k a year, while a livable salary sits at nearly $54k.
Doblas-Madrid said recent inflation reports show prices rising higher than expected, but with a long enough cool-down period, we could still see living costs start to even out.
