If it seems like your paycheck is increasing more than in previous years, it's not your imagination.
Economists expect annual inflation data due Thursday will show a rise of 3.2% in December from 3.1% the previous month.
The headline reading covering volatile food and energy commodities will decline from 4% to 3.8% amid rising rents and falling used car prices.
Zandi says if this trend continues, Americans could feel better about the economy and President Joe Biden's chances of being re-elected could increase.
Several months ago, 70% of Americans said the same, according to an exclusive poll by Suffolk University Sawyer Business School and USA TODAY.
The economy was worsening and 84% said their cost of living was increasing. Survey respondents said they trusted Donald Trump rather than Biden to fix it.
But according to some studies, households have recently returned to pre-inflation financial positions based on another measure – purchasing power.
Purchasing power is how much people can spend based on their costs and income. In 2021 and 2022, while inflation was rising, wage growth was also rising,
but not as fast, leaving many Americans struggling to pay the bills. In June 2022, 9.1% annual inflation reduces the average annual wage increase to 5.4%.