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Financial adviser Doug Short has published his take on Sentier Research's monthly look at median household income for February. The condensed version: Nearly five years after the Great Recession officially ended, median income is up, but it's still not up to where it was at its peak in January 2008, just after the recession began. Here's one way to look at the numbers:

Median household income
As can be seen, the trend has been upward since late 2010, 16 months after the National Bureau of Economic Research says the Great Recession ended. In fact, as Short notes, the "latest monthly gain was the second largest of the 170 data points in this series since the turn of the century."

But there is a big difference between nominal dollars (the red line) and real dollars (the blue line), that is, inflation-adjusted dollars. We all know from personal experience that a 2001 dollar is not worth the same as a 2014 dollar. There's considerable dispute over exactly how inflation should be calculated, but even using the Consumer Price Index, which some critics say underestimates the true inflationary increase, the damage can be seen. Median annual inflation-adjusted income is 6.8 percent lower—about $3,892—than it was in January 2008. Not chicken feed unless you're a one-percenter.

We know why. Fewer people are working. On average, those who are working, even if they are employed at quite similar jobs as they were before the recession clobbered them, are getting paid less. (Their benefits are lower, too, but that's a chart for another day.)

Short says that he also likes to view the median income changes through a different lens:

The next chart is my preferred way to show the nominal and real household income—the percent change over time. Essentially I have taken the monthly series for both the nominal and real household incomes and divided them by their respective values at the beginning of 2000. The advantage to this approach is that it clearly quantifies the changes in both series and avoids a common distraction of using dollar amounts ("How does my household stack up?"). [...]

The stunning reality illustrated here is that the real median household income series spent most of the first nine years of the 21st century struggling slightly below its purchasing power at the turn of the century. Real incomes (the blue line) hit an interim peak at a fractional 0.7% in early 2008, far below the nominal illusionary peak (as in money illusion) of 27.2% six months later and now at 30.3%, an all-time high. In contrast, the real recovery from the trough has been depressingly slight, although at first blush the latest monthly data, as I mentioned above, is the second largest of the century so far.

median household income by percentage change 4-1-14
Just one more example of how the guys who wrecked the economy keep taking their toll on the rest of us.

Originally posted to Meteor Blades on Tue Apr 01, 2014 at 12:40 PM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  Median income (8+ / 0-)

    Median income seems like such a better way to calculate the health of our economy. Certainly better than mean income. And God help us, how does knowledge of the Dow Jones "industrial" index help us in any meaningful way?

    It would be insightful to see how the 25% (first quartile?) fared. My guess is much worse than the median, even relative to their own lower starting point in 2000.

    -5.38, -2.97
    The NRA doesn't represent the interests of gun owners. So why are you still a member?

    by ChuckInReno on Tue Apr 01, 2014 at 12:56:02 PM PDT

  •  Each Quartile probably fared worse. (4+ / 0-)
    Recommended by:
    Meteor Blades, Pluto, kurt, Eric Nelson

    I am just speculating, but speculating based on the projections from the charts.  Probably each quartile fared worse, except maybe for the fourth quartile of the of the one percent.

    The GOP House of Representatives seems intent on making sure that the Oligarchs continue to prosper.

    Voters should select people to represent them in their government. People in government should not select people who may vote!

    by NM Ray on Tue Apr 01, 2014 at 01:04:17 PM PDT

  •  The middle class is getting clobbered (7+ / 0-)

    And the poor are hanging by a thread.

    Let them eat cake is what they probably are saying in the gated mansions.

    The stage is set for what comes next.

    Daily Kos an oasis of truth. Truth that leads to action.

    by Shockwave on Tue Apr 01, 2014 at 01:05:13 PM PDT

  •  Spot Price for "U.S. Foodstuffs" Up 19% since Dec. (11+ / 0-)
    Spot Price for U.S. Foodstuffs

    Commodities Research Bureau

    This is the actual "spot price," not speculation/commodities futures. (We won't even get into the far higher costs to stay warm in one's home in much of the U.S.--assuming you have a roof over your head, of course--over the past few months.)

    (h/t Bloomberg and Zero Hedge)

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Tue Apr 01, 2014 at 01:08:57 PM PDT

  •  In the mean time the talk on the right (3+ / 0-)
    Recommended by:
    camlbacker, kurt, Eric Nelson

    is on reducing or eliminating social security, medicare, medicaid, and most other social programs.  Chained CPI was on the table even though seniors already lose buying power for every year they are retired due to a CPI that doesn't reflect what seniors buy most: Healthcare, Insurance, Prescriptions, Home aides, nursing home care, transportation costs, heat, and electric.  

    Most seniors aren't out there buying the newest, latest and greatest electronic device which does keep coming down in price, or any CD from any artists.  

    Cpi for seniors is explained here:  

    http://en.wikipedia.org/...

    Consumer Price Indices in the United States[edit]

    Main article: United States Consumer Price Index
    In the United States, several different consumer price indices are routinely computed by the Bureau of Labor Statistics (BLS). These include the CPI-U (for all urban consumers), CPI-W (for Urban Wage Earners and Clerical Workers), CPI-E (for the elderly), and C-CPI-U (chained CPI for all urban consumers). These are all built in two stages. First, the BLS collects data to estimate 8,018 separate item-area indices reflecting the prices of 211 categories of consumption items in 38 geographical areas. In the second stage, weighted averages are computed of these 8,018 item-area indices. The different indices differ only in the weights applied to the different 8,018 item-area indices. The weights for CPI-U and CPI-W are held constant for 24 months, changing in January of even-numbered years. The weights for C-CPI-U are updated each month to reflecting changes in consumption patterns in the last month. Thus, if people on average eat more chicken and less beef or more apples and fewer oranges than the previous month, that change would be reflected in next month's C-CPI-U. However, it would not be reflected in CPI-U and CPI-W until January of the next even-numbered year.[4]
    This allows the BLS to compute consumer price indices for each of the designated 38 geographical areas and for aggregates like the Midwest.[5]
    In January of each year, Social Security recipients receive a cost of living adjustment (COLA) "to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)".[6] The use of CPI-W conflicts with this purpose, because the elderly consume substantially more health care goods and services than younger people.[7] In recent years, inflation in health care has substantially exceeded inflation in the rest of the economy. Since the weight on health care in CPI-W is much less than the consumption patterns of the elderly, this COLA does not adequately compensate them for the real increases in the costs of the items they buy.
    The BLS does track a consumer price index for the elderly (CPI-E). It is not used, in part because the social security trust fund is forecasted to run out of money in roughly 40 years, and using the CPI-E instead of CPI-W would shorten that by roughly 5 years.[8]

    Our prime purpose in this life is to help others. And if you can't help them, at least don't hurt them. Dalai Lama

    by prettymeadow on Tue Apr 01, 2014 at 01:38:25 PM PDT

  •  "Capital" by Karl Marx year 1867 (1+ / 0-)
    Recommended by:
    kurt

    Marx explained in Capital I, Chapter 22, looking at international comparisons of wages. He demonstrates that "wherever wages are low the price of labor is dear". That is because, high wages encourage capital to introduce mechanization, and more efficient methods. In other words, it is low wages that are a deterrent to investment.
    We see the same thing today with high wages and better social conditions in Germany, which continues to be the second largest global exporter behind China.
    In the United States Today companies survive by paying low wages which are subsidized by other workers via government subsidies out of their taxes. Better that the companies have to either invest in order to be more efficient and thereby pay decent wages, or else that they disappear and the capital they misuse be put to work in some other function where it can employ workers on decent wages..

    You Don't Happen To Make It. You Make It Happen !

    by jeffrey789 on Tue Apr 01, 2014 at 02:02:02 PM PDT

  •  Charts(s) of the day.. (1+ / 0-)
    Recommended by:
    prettymeadow

    I hope it becomes/is (?) a regular new feature MB because it is such a smart idea. It helps people (like me) to learn about to better grasp and see the picture of what is actually happening on each issue presented along with the words telling the story

    This is a very good thing.

    We know why. Fewer people are working. On average, those who are working, even if they are employed at quite similar jobs as they were before the recession clobbered them, are getting paid less. (Their benefits are lower, too, but that's a chart for another day.)
    - unfortunately today's picture is almost a flat line going back years when it comes to progress for the people - and for some even lower , a long slow constant clobbering

    Thx MB - for another day

  •  Question: is that real NET household income? (0+ / 0-)

    ie, after taxes and benefits?

    (REALLY real net income would include social and environmental costs and benefits, consumed collectively, but those are notoriously hard to quantify and to standardize.)

    There's no such thing as a free market!

    by Albanius on Tue Apr 01, 2014 at 09:16:54 PM PDT

  •  FWIW (3+ / 0-)
    Recommended by:
    JesseCW, nominalize, allison88

    I'm making about the same wage today that I was making...

    in 1983.

    Not adjusted for inflation, but adjusted for several layoffs in between and age of the employee.

    Seriously, my take home today is almost the same as it was in 1983.

    •  magazines i worked for paid more in 1983 (0+ / 0-)

      than they do now....likely because there's not much reason to read magazines these days when you can get all you need online. which pays even less, if at all.

    •  my take home (1+ / 0-)
      Recommended by:
      prettymeadow

      is less than it was when I was 21... 43 years ago

      layoffs, mergers and acquisitions, forced retirement, long-term unemployment, prejudice and hatred, small mindedness and short-term thinking...

      as above, the stage is set for what comes next...

      and no matter how much the inevitable is pushed off, it is coming...

      I still ask why? When all do better, all do better. Humans despise themselves and each other -- religion and politics teach us this. But it does not have to be so.

  •  Good Luck getting the media to report this. (3+ / 0-)
    Recommended by:
    JesseCW, jobobo, allison88

    Giggles.

  •  Not much to say … (3+ / 0-)
    Recommended by:
    JesseCW, GoGoGoEverton, allison88

    … but this has got to be repeated and repeated and repeated and repeated.

    Wealth capture will continue unabated until we stop it.  And knowing that that is how almost all the rich get rich is the first step in that process, imho.

    Business long ago discovered the ROI on wealth capture was orders of magnitude higher that that on wealth creation (one is hard).  We need to dis-incentivise (sorry) wealth capture, or the pirates will continue to suck the lifeblood from our beleaguered economy.

    (Sidelong blow:  Just as Cheney and the wealth extraction industries discovered how much easier it was to pump cash from the US Treasury than it is to actually pump oil out of the ground — particularly if the ground isn't yours.)

    Vote rape. Vote torture. Vote War Crimes. Vote with the American top 1%.

    by Yellow Canary on Thu Apr 03, 2014 at 06:39:41 PM PDT

  •  Not just the guys who wrecked it. The guys who (1+ / 0-)
    Recommended by:
    allison88

    ran on getting hired to fix it, and then decided they had other priorities.

  •  Thanks MB. It would do us all good to (1+ / 0-)
    Recommended by:
    allison88

    get a solid understanding of what median income means and what it is now in the US; this statistic shows better than any how lopsided the wealth and income equity is in this country.

    While you dream of Utopia, we're here on Earth, getting things done.

    by GoGoGoEverton on Thu Apr 03, 2014 at 06:51:51 PM PDT

  •  Exactly right Blades! (0+ / 0-)

    Historically REAL median income only goes up as unemployment approaches 5% and below. That has only taken place 7 combined years since 1980.

    So lets give ourselves a raise a suspend FICA so that we can maintain full employment and therefore increasing REAL income

    "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

    by Auburn Parks on Thu Apr 03, 2014 at 07:11:38 PM PDT

    •  I oppose a FICA reduction (0+ / 0-)

      Because that would just lay the ground for further attacks on Social Security and Medicare. Better to focus on a realistic minimum wage for starters, I think.

      •  How do we fund the defense dept.'s $750 B in (0+ / 0-)

        spending per year without a special regressive flat tax and a so-called "trust fund"?

        The whole notion of some "trust fund" that you "pay into" (you really dont), serves some political purpose. As is evidenced by your support for a regressive flat tax. But accounting and politic tactic has a serious downside, namely that people can erronesouly believe that SS is "going bankrupt" or is "unsustainable" when in reality nothing could be farther from the truth.

        Congress made all the laws that created the modern US fiat dollar. We can't ever run out of fiat money, therefore SS can never run out of money.

        In summary, FICA has nothing to do with funding SS payments, they come out of the Treasury General Account just like all other spending. They are accounted for in the TSY balance statements just like all other spending. There is  no special pot of SS money, Congress simply instructs the TSY and Fed to create the money to make the payments.

        "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

        by Auburn Parks on Fri Apr 04, 2014 at 02:51:19 PM PDT

        [ Parent ]

  •  2000 - 2008 the Clinton Stall. (1+ / 0-)
    Recommended by:
    Andrew F Cockburn

    2008 - present the Obama Decline.

    Get rid of all those government programs and those communists like Clinton and Obama, and the rising tide will affect every boat.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Thu Apr 03, 2014 at 07:13:06 PM PDT

  •  What took my breath away was the inflation (1+ / 0-)
    Recommended by:
    allison88

    I mean--- since just 2000, $40,000 then is $56,000 today?  

    Is that not an inflation problem?  Aren't fed interest rates at zero to "avoid" inflation?  

    WTF is going on here.

    Nobody deserves poverty.

    by nominalize on Fri Apr 04, 2014 at 01:49:04 AM PDT

    •  nobody deserves poverty (1+ / 0-)
      Recommended by:
      allison88

      but that's what it is going to be until the 1% is removed...

      what's the matter folks?

      never heard of the French revolution?

      How about the American revolution?

      or the civil war?

      Corporate America is just slavery in a mildly different format.

  •  I worked at the same place as Short (0+ / 0-)

    twenty years ago.

    Really, really smart guy. I'm not surprised he's become well known.

    The thing about quotes on the internet is you cannot confirm their validity. ~Abraham Lincoln

    by raboof on Fri Apr 04, 2014 at 04:17:28 AM PDT

  •  That's wonderful! (0+ / 0-)

    I can finally say my income is off the charts!

    (Off the bottom end, but... what the hey!)

    I am not religious, and did NOT say I enjoyed sects.

    by trumpeter on Fri Apr 04, 2014 at 09:09:04 AM PDT

  •  That's Also Inflation Killing Savings (0+ / 0-)

    One implication of those charts is how much savings is reduced by inflation. When you don't have a nominal income, what you saved from some nominal income is worth less when you later spend it. The difference tracks pretty exactly the difference between nominal and real income.

    So all that rise of nominal income , plus the size of the drop in median income, is the inflation against savings. That's about a 28% drop in the value of every dollar you had saved when you voted for Gore in 2000.

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Fri Apr 04, 2014 at 09:44:47 AM PDT

    •  It depends on where you kept your money. (0+ / 0-)

      I just looked at the 10 year returns on Vanguard. (which is as far back as they go).

      Under your mattress, you would have made 0%.

      In a money market account, you would have made 1.6% annually, which would have cut some of the losses.

      In their S&P 500 fund you would have made 7.4% annually and beaten inflation handily. Note that this includes the 2008 crash, which was the worst in my lifetime.

      •  Savings (0+ / 0-)

        Only the mattress is savings. Or a literal savings or checking account, with guaranteed (if variable and small) interest and FDIC insurance. The others are investments. Which are expenses, losses, until you sell them - perhaps for some profit.

        As for money market accounts, they were around zero since 2009, and even negative that year. Have they really returned 1.6% annually across the past 14 years?

        "When the going gets weird, the weird turn pro." - HST

        by DocGonzo on Fri Apr 04, 2014 at 01:24:14 PM PDT

        [ Parent ]

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