More Americans expect their salaries to be cut soon, reversing a steady decline in the number of workers who fear pay cuts, according to a March survey. Adding insult to injury, those same consumers expect to take a bigger hit on expenses because of rising inflation.
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Mason Morfit | Taxi | Getty Images |
The percentage of Americans who expect a decrease in their income over the next six months ticked back higher to 15.3 percent in March, up from 13 percent in February, which had been the best reading of wage confidence since 2008, according to fresh survey data from the Conference Board.
About the same percentage last month—15.3 percent—expect a pay increase, and the rest of consumers surveyed expect their income to stay the same.
Inflation expectations also jumped to their highest in two years, according to the private analytics firm.
Stocks are higher in 2011 and just below their bull-market highs this weekas investors overlook stagnant consumer data and instead concentrate oncash-rich companies looking to merge or buy back stock, as well as a Federal Reserve ready to keep interest rates low for the foreseeable future, investors said.
That sentiment contrasts with the attitudes of workers, who believe their wages are endangered once again as companies remain reluctant to hire and costs for raw materials rise. At the height of the crisis, nearly a quarter of Americans expected a paycut within six months, and many got one.
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“The Fed chairman won’t become concerned about inflation until it’s wage-driven, and these numbers indicate the opposite,” said Jim Iuorio of TJM Institutional Services.
Personal income increased 0.3 percent in February, the Bureau of Economic Analysis data released Monday. But accounting for inflation, real disposable income decreased 0.1 percent last month.
“An overall negative number insures continued Fed accommodation despite inflation fears,” said Iuorio.
Ironically, a growing number of investors believe the Fed is doing more harm than good by inadvertently boosting commodity costs, thereby increasing expenditures for companies that could use that money instead to give raises to overworked employees. Prices for cotton, silver, coffee and corn are up more than 80 percent in 12 months.
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The stock market, meanwhile, is signaling a bit of indigestion in reaction to consumer sentiment. Shares of Target [TGT 49.16 
“The market will start to care when first-quarter earnings releases come out, and investors see first-hand the falling wage confidence effect and can quantify what this means,” said Peter Boockvar, equity strategist at Miller Tabak.
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