At the beginning of every month, Sentier Research publishes an update of median household income from two months prior via Census Bureau data. Doug Short at Advisor Perspectives synopsizes
the report and produces some explanatory charts. The synopsis for January was posted early this month.
The median household income has been improving markedly since its August 2011 low point. But, as can be seen in the chart above, even though the economic expansion that began in the summer of 2009 is now nearly six years old, the real—that is, inflation-adjusted—median income is still $2,600 below where it was at the interim high point in January 2008. That is down 4.6 percent from what it was a month after the Great Recession began. And it's also $2,738 below where it was in January 2002.
The good news is that things were worse a year ago. Adjusted for inflation, real median household income was up $1,773 on a year-to-year basis. That was a 3.4 percent increase. But a big chunk of that rise in buying power was because of a -0.68 percent month-over-month drop in the Consumer Price Index. Which was mostly due to lower oil prices.
In real dollar terms, the median annual income is 4.6 percent lower ($2,600) than its interim high in January 2008 but well off its low in August 2011.
Head below the fold for more on this story.
Short points out:
Let's take a closer look at the monthly data since the end of the Great Recession. The adjacent chart highlights the real monthly median values since 2008. The right axis shows the same scale as the chart above -- the percent change from the real household income value at the start of the 21st century. The January 2015 real median annual income is 3.9% below our turn-of-the-century starting point and 4.6% below its interim high in January 2008.
Is there seasonality to the monthly data? The column chart shows the monthly averages of nominal month-over-month change since 2000.
As the excellent data from Sentier Research makes clear, the mainstream U.S. household was struggling before the Great Recession. At this point, real household incomes are in worse shape than they were [...] when the recession ended.
It should be noted, as New Deal Democrats have pointed out, that median household income—which may be income of two or more earners—is not the same as median wages paid to a single employee. For example, in the case of families where someone has retired, real median household income could fall at the same time as real median wages are rising. Although baby boomers, the first wave of whom turned 65 in 2011, have not been retiring as fast as expected, as they continue to age, they will contribute to the lowering of real median household income as they do retire.
We know, however, from other data that real median wages have been stagnant for decades before the Great Recession, with a three-year surge at the end of the 1990s. Last year, the buying power of wages rose, bolstered by the fall of the CPI thanks to those aforementioned lower oil prices. In the fourth quarter of 2014, real median weekly wages climbed just 0.5 percent from the previous year, to $799. That was better than in the fourth quarter of 2013, when it rose just 0.2 percent, or in 2012 when it fell 0.5 percent and 2011 when it fell 1.7 percent. Nonetheless, it's been paltry gain, and they still a long way to catch up to where they were eight years ago, not to mention 13 years ago.