Adriana Kugler

How weaker wage growth, persistent inflation, and a cooling labor market are putting new pressure on household finances. Economic debate often revolves around two headline measures: inflation and unemployment . Both matter. But a third measure reveals something those numbers can miss: how workers actually experience the economy in everyday life. Lately, it has been sending a warning. That measure is real earnings: what a paycheck is worth after accounting for rising prices. Right now, that signal is far from reassuring. Why the Paycheck Number Can Be Misleading The number printed on a paycheck, nominal wages, has been rising. But a larger number only helps if it grows faster than the costs of groceries, gas, and rent. Real earnings strip inflation out of the picture and show what that paycheck can actually buy. When prices climb faster than pay, purchasing power falls, regardless of what the nominal wage figure says. This distinction is not abstract. Somewhere between 60 and 65 percent...

Central bank mandates are built around domestic conditions. Yet the past decade has pushed global developments and geopolitical risk to the center of the conversation, and that changes how the job gets done.

In a companion piece, I laid out why research on uncertainty and inflation has produced such contradictory results: the studies simply do not separate uncertainty by source. Here I want to walk through what happens once you do, because the results are genuinely striking. I have presented this work in academic settings, including a lecture at the London School of Economics on monetary policy under geopolitical shocks . Take three specific kinds of risk: trade policy uncertainty, geopolitical risk tied to oil, and uncertainty stemming from national security concerns. Analyze these separately instead of folding them into one broad uncertainty variable, and each one carries its own distinct economic signature. Trade policy uncertainty produces the inflationary effect you would expect. Oil-linked geopolitical risk starts out inflationary too, since disruptions to oil supply push energy prices higher, but that effect eventually flips and becomes disinflationary. The third source runs the opp...

Ask ten economists whether uncertainty pushes inflation up or down, and you may get several confident, contradictory answers. The disagreement itself turns out to be the more interesting finding. Ask ten economists whether rising uncertainty pushes inflation higher or lower, and you will likely get several different, well-supported answers. That is the strange state of one of the more pressing questions in macroeconomics today. I have returned to this question repeatedly in my academic work and in venues like my 2025 Whittington Lecture at Georgetown's McCourt School , and the honest answer is that the literature on what drives inflation does not converge on one story. The spread of findings is striking. Some papers find uncertainty pushes inflation down. Others find it pushes inflation up. A few find no measurable effect at all. One rigorous study traces consumer uncertainty through what economists call a real-options channel: uncertain consumers pull back, firms hold off on hirin...