Americans are getting smaller pay raises while tariffs and higher gas prices are threatening to make everything more expensive.

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Translation: The affordability problem isn’t improving.

New government data released Friday showed non-supervisory workers getting a 3.4% pay raise on average hourly earnings over the last year. That’s the slowest pace of wage gains since 2021, and a downshift from the last two years, when pay bumps were closer to 4%.

The slowdown comes as economists worry about rising inflation, with the Iran war choking off oil tankers and pushing gas prices up over $1 per gallon in just a month, to a national average of $4.09 on Friday.

As diesel costs break $5.50 a gallon (compared to just $3.89 a month ago), retailers and grocers are now contending with higher transportation costs. Amazon said Thursday it will begin charging sellers a 3.5% “fuel and logistics-related surcharge” beginning on April 17.

Airlines like United and JetBlue are raising bag fees in an effort to offset sky-high jet fuel costs. The International Air Transport Association says the price of jet fuel is up 104% in the past month.

“With the recent uptick in inflation driven by energy prices, real wage growth is likely to decelerate further, putting increased pressure on consumers,” said Thrivent’s chief financial and investment officer, David Royal.

For now, Americans are still seeing their earnings rise at a faster pace than the increase in price tags at the store. As pay rose by 3.4%, the most recent inflation data showed prices rising by 2.4% year-over-year.

Wage gains for non-supervisory employees — a category that includes roughly four out of every five non-farm workers — have been outpacing price increases since March 2023, when post-pandemic inflation finally began to cool.

But the concern is that the story could change soon. Because of the bump from oil prices, Navy Federal Credit Union Chief Economist Heather Long said it’s possible inflation could pace at 4% this month.

“Four percent is above that 3.5 percent annual wage gain, and that’s where you see a lot of squeeze on workers, particularly middle-class and moderate-income workers,” Long said.

Warning signs are flashing that slowing wage growth could ripple beyond the gas station and prices at the grocery store. Higher mortgage rates now have some worried about icing out even more potential homebuyers.

The average 30-year fixed mortgage rate rose from 5.99% at the start of the war to 6.45% on April 3, according to Mortgage News Daily. The rise is due in part to concerns that the Federal Reserve will have to raise interest rates to tamp down on war-driven inflation.

“With choppy job growth, weaker labor-force attachment and rising uncertainty, many households — especially renters and first-time buyers — could become more cautious as weaker inflation-adjusted wages erode recent affordability improvements,” said Zillow senior economist Orphe Divounguy.

If wages can’t keep up with rising costs across the board, it’s likely that affordability will become a larger issue than it already was prior to the war. An NBC News poll conducted during the first week of the war with Iran found that, for a plurality of respondents, inflation and the cost of living was the most important issue facing the country.

Economists feel the same way.

Responding to a question from NBC News at a March 18 news conference, Federal Reserve Chair Jerome Powell noted that “real” wage gains — a measure of wages adjusted for inflation — need to be positive in order for Americans to feel better about affordability.

“it will take some years of positive real earning gains for people to feel good again, we think. But you’re right — when you talk to people, they do feel squeezed,” Powell said.

The United States added 178,000 jobs in March, blowing past expectations and showing a resilient labor market just as the war with Iran began escalating, sending up oil prices.

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The unemployment rate fell to 4.3% last month, down from 4.4%. The gains were concentrated in health care, construction, transportation and warehousing.

Despite the outsized headline figure, there were further indications that the job market remains wobbly. Wage growth declined to 3.5% in March from 3.8% in February, falling short of forecasts.

Jobs report estimates from January and February were also revised, upward and downward respectively. Combined, they show that U.S. payrolls fell by a net 7,000 over those two months.

The labor force participation rate, or the share of the overall population either employed or looking for work, fell to its lowest level since November of 2021.

“While this month’s jobs report delivered an upside surprise, we continue to believe that risks to the labor market remain elevated and higher oil prices from the Iran conflict could prove an additional impediment in the months ahead,” Scott Helfstein, head of investment strategy at Global X financial group, said in a note to clients.

Surveys conducted by the BLS for this report were completed by March 12. At the time, the full brunt of the war had yet to hit the job market.

Three weeks later, gasoline prices have surged to more than $4 a gallon, a level that, if it is sustained, would sap U.S. consumers of hundreds of dollars in annual discretionary income.

On Wednesday, the Atlanta Federal Reserve lowered its real-time gross domestic product estimate to 1.9%, down from more than 3% just before the start of the war.

On Tuesday, the BLS reported the hiring rate in February fell to just 3.1% of the U.S. workforce, a level last recorded in April 2020, as the Covid pandemic bore down.

Job openings also fell in February, though they appear to be stabilizing overall. The rate of layoffs also remains at an all-time low.

Meanwhile, many Americans’ views of the economy and Trump’s handling of it continue to sink to new depths.

A CNN poll out this week found that just 31% of respondents approved of how Trump is managing U.S. economic performance, with just 27% saying they approved of his handling of inflation, down from 44% a year ago. His overall approval rating appears to have stabilized at about 35%.

A debate is now underway about how many jobs the U.S. would need to add each month to keep the unemployment rate — 4.3% as of Friday — stable.

Over the past year, a massive drop in overall immigration to the U.S., coupled with a growing number of baby boomers leaving the workforce, mean fewer overall jobs need to be created for the economy to absorb newcomers to the labor force and keep the overall unemployment rate steady, according to economists with the Dallas Federal Reserve.

That overall number of new jobs needed is known as the “breakeven” employment rate. The economists wrote in a note published this week that the breakeven employment rate now may be close to zero.

If the overall workforce continues to shrink, even fewer new jobs will be needed to incorporate workers entering the labor force, such as recent college graduates or parents who put their careers on hold for a few years.

That won’t necessarily make looking for a job any easier. The median spell of unemployment is now about 2½ months, with the average much longer — about six months. About 25% of all unemployed workers are out of work for at least 27 weeks.

Fourth-generation Iowa farmer Mark Mueller is no stranger to the ups and downs of the agriculture industry. But right now, he thinks America is on the cusp of a farm crisis.

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“I am more concerned now than I have been in my 30 years of farming,” Mueller told NBC News.

Even before the Iran war, Mueller said, many farmers felt they were being squeezed. Consolidation in the fertilizer industry and increased competition from abroad have resulted in higher prices for fertilizer and feed — and smaller returns on Mueller’s corn and soybean crops.

Many farmers who couldn’t pay their bills in recent years went under. In 2025, the number of Chapter 12 farm bankruptcies reached 315, according to the American Farm Bureau Federation. That was up 46% from the previous year.

Now, the Iran war is putting even more pressure on farmers.

Before the war, roughly a third of the world’s fertilizer ingredients and a fifth of its oil supplies passed every day through the Strait of Hormuz, a narrow waterway off Iran’s southern coast. But since the U.S. and Israel attacked Iran on Feb. 28, the strait has been effectively closed by Tehran, leaving scores of tankers stranded.

The strait’s closure has driven up global prices for fertilizer and for the diesel fuel that powers most of America’s heavy agricultural equipment.

The double whammy is hitting farmers just as they head into the spring planting season.

“This is that perfect storm where everything comes together and hammers the farmer,” said Mueller, who also serves as the president of the Iowa Corn Growers Association.

Mueller said his fertilizer supplier was selling a nitrogen fertilizer he needs for $795 per ton on Feb. 22, a few days before the war started. At the end of March, it was $990, Mueller said, a nearly $200 jump in just a few weeks.

Meanwhile, the price he’s paying for diesel has jumped, too. Diesel is now averaging $5.51 nationwide, up from $3.76 right before the war, according to AAA.

Mueller said he got most of the fertilizer he needs for spring before the war — but had to buy some at the higher prices. He’s holding off on purchasing the additional fertilizer he needs for summer, hoping prices will come down.

President Donald Trump’s tariffs have also added to the cost of goods that farmers import from overseas — and frustrated many of the foreign buyers of America’s agricultural products.

“Our government made our life more difficult by walking away from trade deals or instituting tariffs or just basically making our customers angry — our customers being other nations and companies in other nations,” said Mueller.

Lance Lillibridge, a corn and cattle farmer from Vinton, Iowa, told NBC News he plans to use less fertilizer this year.

“I’m probably going to see a reduction in yield,” said Lillibridge. “If there’s not the supply out there, then the price is going to go up.”

If the war continues, the higher prices could ripple through the supply chain and ultimately result in higher prices at the supermarket.

“We’re talking about all the crops and all the food products that we consume on a daily basis,” said Gregory Daco, chief economist at EY-Parthenon.

“Anything that is grown and that requires fertilizers, which is most of everything that we consume, is potentially affected by this rise in fertilizer prices,” said Daco. “And as a result, we may see these prices rise rapidly across grocery stores in the U.S.”

Take corn, for example. If corn prices spike, then feeding cattle becomes more expensive for many farmers. Plus cattle farmers are also dealing with the higher fuel prices. The cost of beef has already hit record highs — in part from shrinking cattle herds and drought — and it could surge even more.

“I worry about how much more consumers will continue to pay for beef,” said Will Harris, a fourth-generation cattle farmer in Bluffton, Georgia. “I think that I can produce it as cheap as anybody else, but I don’t know where consumers draw their lines.”

It may take a while for price increases on the farm to show up at the grocery store. Farmers are just planting their spring crops now, and it could take months for them to be harvested and sent off to distribution centers and eventually grocery stores.

But consumers may see higher prices sooner rather than later, because of higher transport costs with pricier diesel.

“If you’re feeling these costs now, it’s only going to continue to increase as the supply chain fills with higher-cost goods,” said Lillibridge.

“Corn is used in over 4,000 products,” he added. “It’s not just food — it’s industrial products, like your paper that you would put in your printer has cornstarch in it, plastics, just tons of things have industrial uses from corn.”

Economists say the longer the war stretches on, the larger the effects could be.

“Right now, our farmers can get the product — it’s just really expensive,” said Faith Parum, an economist at the American Farm Bureau Federation, an advocacy group for farmers and ranchers. “We’re slowly starting to hear the longer this goes on, we’re also going to have issues with even the availability of the fertilizer.”

That could further strain farmers.

“We’re going on to year four of losses across the farm economy,” said Parum. “It’s going to become harder and harder for them to put a crop in the ground.”

Before the war, the Agriculture Department estimated that farm sector debt could reach a record $624.7 billion in 2026.

Farmers have received some financial assistance from the federal government over the years. In December, the Trump administration announced a new tranche of $12 billion in aid to farmers.

At a White House event for farmers in March, Trump said that he would push for more aid and urged Congress to pass a new farm bill.

Trump also pledged to ask Congress to permit year-round sales of E15, an unleaded fuel blended with 15% ethanol that the American Farm Bureau Federation says could save consumers money at the gas pump and create markets for American-grown crops.

Mueller was among the farmers last month at the White House, where he listened to Trump.

“I guess I would liken it to empty calories,” he said of the president’s remarks. “It was like a pep rally with very little being said.”

Mueller fears that the mounting pressures on farmers, exacerbated by the war, could lead some to hang up their hats for good.

“I really do see fewer farmers when it’s all done,” he said. “In the end, the consumer will still have fewer choices, probably have a little higher prices, and farmers will have less margin than they did before.”

WASHINGTON — House and Senate Republican leaders jointly announced a plan Wednesday that they said would end the shutdown of the Department of Homeland Security that caused major airport delays.

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“In the coming days, Republicans in the Senate and House will be following through on the President’s directive by fully funding the entire Department of Homeland Security on two parallel tracks: through the appropriations process and through the reconciliation process,” House Speaker Mike Johnson, R-La., and Senate Majority Leader John Thune, R-S.D., said in a statement.

The two leaders were vague about the exact plan, but it appears to closely resemble the Senate’s preferred path from Friday.

Johnson and Thune heavily implied that it would be for the Senate to, once again, pass a bill it approved unanimously last week, which it could try to do as early as Thursday.

It would fund all of DHS except ICE and Customs and Border Protection, which Democrats won’t agree to fund without reforms to immigration enforcement operations. Those two agencies already have separate funding.

House Republican leaders trashed that bill and rejected it Friday, but they now appear ready to back down and accept the Senate plan. They would have to vote to pass it through the House.

GOP leadership had no immediate comment on the timing for a vote. Both chambers are scheduled to be on recess until April 13.

Then Republicans would fund ICE and CBP in a separate party-line “budget reconciliation” bill that could bypass a filibuster and get approved without any Democratic votes. The timing for that is even less clear.

Johnson and Thune said the “two-track” plan would “fully reopen the Department, make sure all federal workers are paid, and specifically fund immigration enforcement and border security for the next three years so that those law-enforcement activities can continue uninhibited.”

A White House official told NBC News that the administration supports the Johnson-Thune plan.

Earlier Wednesday, President Donald Trump called on Republicans to pass the party-line bill “no later than June 1st.” He threw the earlier plans to reopen DHS into chaos last week when he declined to comment on the Senate bill, which led House Republicans to reject it.

DHS has been shut down for more than a month, with employees for the TSA, FEMA and other agencies going for weeks without pay. Trump signed an executive order last week to pay TSA employees, but the legality and length of that plan are murky. Thousands of civilian Coast Guard employees and other DHS workers are still not being paid.

Senate Minority Leader Chuck Schumer, D-N.Y., slammed Republicans for having “derailed a bipartisan agreement” for days, “making American families pay the price for their dysfunction.”

“Throughout this fight, Senate Democrats never wavered. We were clear from the start: fund critical security, protect Americans, and no blank check for reckless ICE and Border Patrol enforcement,” he said Wednesday. “We were united, held the line, and refused to let Republican chaos win.”

On Friday, House Minority Leader Hakeem Jeffries, D-N.Y., said, “House Democrats are prepared to support the bill to end the Trump-Republican shutdown of the Department of Homeland Security, make sure TSA agents are paid, stand up for FEMA and for the Coast Guard, for our cyber security professionals, and stop inconveniencing Americans.”