Yes. For two months running, April and May 2026, inflation ran faster than wage growth. The last stretch like this was the pandemic era of 2021 to 2023. If your paycheck feels like it’s shrinking even though the number on it went up, you’re reading the economy correctly. Here’s what’s actually happening and what it means if you’re thinking about buying or refinancing.
Wage growth ticked up to 3.5% year-over-year in June, but that still trails inflation, which sat at 4.2% in May. I expect inflation to hover near that level over the next few months. When prices climb faster than earnings, households lose ground in real terms. Every dollar simply buys less than it did.
A big driver right now is fuel. The war with Iran has pushed energy costs higher worldwide, and those increases ripple into the price of goods through higher transportation costs. So this isn’t just a “gas is expensive” story. It shows up across the shelf.
Here’s the number that concerns me most: the personal saving rate has fallen to 2.5%. That tells me households are maintaining their lifestyle by drawing down savings rather than out-earning their costs. It works, until it doesn’t. There isn’t much cushion left in that figure, and a thin savings buffer is exactly what leaves a household exposed when something unexpected hits.
The June employment report looked fine at a glance, but the details matter. Only 57,000 jobs were added, and the prior two months were revised down by 74,000. Growth is heavily concentrated in a few sectors, mostly health care. Leisure and hospitality lost 61,000 jobs, a genuine surprise given the World Cup crowds, and that single weak sector was enough to drag the national total lower.
The unemployment rate did fall to 4.2% in June, but not for a healthy reason. It dropped mainly because the labor force participation rate fell three-tenths of a point. There were 832,000 fewer people in the labor force in June than in May. When people stop looking for work, they leave the math that produces the unemployment rate, so the rate can improve even as the underlying picture weakens. Setting aside the pandemic dip, June’s participation rate of 61.5% was the lowest since June 1976.
None of this should send you into panic, but it should sharpen how you plan. Rates aren’t likely to fall sharply while inflation stays near 4%, so if you’ve been waiting for a dramatic drop before buying, that may be a long wait. It’s worth running the numbers on what you can afford today. Protect your savings buffer, too. With the national saving rate this thin, a healthy reserve is your best protection, and I’d rather structure a loan that leaves you with breathing room than one that maxes you out. Finally, lock strategy matters more in a choppy market. When the data is sending mixed signals, having a clear plan for locking your rate is worth more than trying to time a perfect bottom.
If you want to talk through how these conditions affect your specific situation, whether it’s a purchase, a refinance, or just deciding if now is your moment, that’s exactly the conversation I have every day. Reach out to my team and I, we're here for you.
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