--- title: "‘Sinking Under Water’: Americans Feel the Inflation Squeeze as Prices Outpace Wage Growth, Economist Says — Warns 50-Basis-Point Fed Hike Is Back on the Table" type: "News" locale: "en" url: "https://longbridge.com/en/news/305136247.md" description: "US inflation remains high, with October CPI rising 0.4% and outpacing wage growth, causing a purchasing power squeeze. Experts warn this may prompt the Federal Reserve to implement a 50-basis-point rate hike in December, though some expect only 25 basis points. Meanwhile, holiday travel costs surge due to demand-driven inflation, while major stock indices show year-to-date gains despite recent daily declines." datetime: "2026-11-11T07:45:22.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/305136247.md) - [en](https://longbridge.com/en/news/305136247.md) - [zh-HK](https://longbridge.com/zh-HK/news/305136247.md) generator: "portal-rs" --- # ‘Sinking Under Water’: Americans Feel the Inflation Squeeze as Prices Outpace Wage Growth, Economist Says — Warns 50-Basis-Point Fed Hike Is Back on the Table Over the past year, estimated consumer prices rose 4% while wages increased 3.1%, implying a roughly 0.9-percentage-point squeeze on purchasing power, according to **Justin Wolfers**, economist and host of **Platypus Economics**. This dynamic leaves average workers feeling like they are “sinking under water,” Wolfers stated. ## **Inflation ‘Still Too High**‘, Says Expert The October Consumer Price Index report showed a 0.4% month-over-month increase for the headline number and a 0.3% increase for core inflation. These current numbers are “still too high for the Fed,” stated **Chris Zaccarelli**, Chief Investment Officer for Northlight Asset Management. While the headline number slowed from a 0.6% increase in September, Zaccarelli noted the 0.4% figure was a disappointment compared to the expected 0.3% increase. Meanwhile, Wolfers cited the Iran war in his podcast dated Nov. 11, and said that “the cost of living has surged again over recent months. That’s the direct effect of the Iran war. And so over the past year, prices have risen faster than wages.” “That’s why it feels like you’re sinking under water a little bit,” he added. **Read Also: Did Jensen Huang Mislead the Board? Gary Black Raises Questions As Nvidia CEO Returns to ‘Business As Usual’ Amid Affair Fallout** ## **A** ‘**Double Helping’ Rate Hike?** Following the report, markets rate a December Federal Reserve rate hike as a certainty, according to Wolfers. Wolfers flagged that markets now see a 15% chance that the Fed goes for a “double helping,” raising rates by half a percentage point instead of the usual quarter point. This follows comments from Fed Governor **Chris Walle**r, who stated before the release that a 0.3% **core reading should put** a 50-basis-point hike on the table, Wolfers noted. Zaccarelli added that given the higher-than-desired inflation, a December rate hike is more likely. However, his firm expects the Fed will only raise rates by 0.25% next month. Zaccarelli warned that a more aggressive Fed “could prove to be too big of a headwind for the market to overcome next year.” ## **Holiday Travel Demand** The data also points to a costly holiday season, with the “most expensive part” of Thanksgiving being the travel required to get there, Wolfers said. Wolfers cited that airfares are up 28% and gasoline is up 38% over the past year. **Jeffrey Roach**, Chief Economist for LPL Financial, stated that inflation is partly a “demand-driven problem, not just supply-induced.” According to Roach, higher airline fares have not slowed flying demand, with travel remaining above last year’s levels despite rising costs. ## **How Has the Stock Market Performed?** The S&P 500 index has advanced 9.66% year-to-date. Similarly, the Nasdaq Composite index was up 7.88%, and the Dow Jones gained 7.96% YTD. On Tuesday, the **SPDR S&P 500 ETF Trust** (NYSE:SPY) and **Invesco QQQ Trust ETF** (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed lower. SPY was down 0.37% to $749.92, while QQQ declined 0.68% to $674.76. Meanwhile, the Dow tracker, **State Street SPDR Dow Jones Industrial Average ETF Trust** (NYSE:DIA), ended 0.31% lower at $521.73. **Read Also: Anthropic’s S-1 Hides Its Most Bullish Number, Says Larridin CEO** ***Disclaimer:*** *This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.* *Photo courtesy: Shutterstock* ### Related Stocks - [QQQ.US](https://longbridge.com/en/quote/QQQ.US.md) - [SPY.US](https://longbridge.com/en/quote/SPY.US.md) - [.DJI.US](https://longbridge.com/en/quote/.DJI.US.md) - [.IXIC.US](https://longbridge.com/en/quote/.IXIC.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) ## Related News & Research - [Western Digital Stock Rebounds as Wall Street Bets AI Storage Demand Outlasts Election Rout](https://longbridge.com/en/news/304662557.md) - [Invesco QQQ $QQQ Stock Acquired by Pinkerton Wealth LLC](https://longbridge.com/en/news/303959191.md) - [Fed's Logan calls for two more rate hikes, possibly rapidly](https://longbridge.com/en/news/305039195.md) - [Is the Stock Market Going to Crash? 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