Category Archives: median household income

Median Household Income in May 2021

Political Calculations' initial estimate of median household income in May 2021 is $68,526, an increase of $738 (or 1.1%) from the initial estimate of $67,788 for April 2021.

The latest update to the chart tracking Median Household Income in the 21st Century shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through May 2021. The inflation-adjusted figures are presented in terms of constant May 2021 U.S. dollars.

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to May 2021

May 2021's increase in median household income continues to be accompanied with rapidly rising inflation. With respect to April 2020's inflation-adjusted peak, the purchasing power of the U.S. median household income in May 2021 falls $1,023 short of that level after adjusting for inflation.

The good news is that relative gap peaked in March 2021 and has shrunk considerably in the months since, indicating faster growth in incomes.

Analyst's Notes

The BEA's estimates for aggregate wage and salary data from January 2021 through April 2021 were revised slightly from the Bureau's previous estimates. The estimates for January and February 2021 were adjusted downward by 0.01% and 0.02% respectively. The estimates for March and April 2021 were revised upward by 0.01% and 0.04%.

References

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Population. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 28 May 2021. Accessed: 28 May 2021.

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Compensation of Employees, Received: Wage and Salary Disbursements. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 28 May 2021. Accessed: 28 May 2021.

U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 12 May 2021. Accessed: 12 May 2021.

Relative Affordability of U.S. New Homes Continues Rapid Decline

Median new home sale prices continued rising faster than median household income in April 2021.

We can see that trend in the latest update to our chart tracking the ratio of the trailing twelve month averages of median new home sale prices to median household income. Through April 2021's preliminary estimates, we find the typical new home sold in the U.S. now costs 5.24 times the typical household income.

Ratio of Trailing Twelve Month Averages of Median New Home Sale Prices and Median Household Income | Annual: 1967-2019 | Monthly: December 2000-April 2021

We're introducing a new chart today to more clearly communicate the trends for the relative affordability of new homes sold in the U.S. Here, a rising trend corresponds with new homes becoming relatively more affordable, while a falling trend indicates new homes are becoming less affordable.

Relative Affordability of New Homes in U.S. | Annual: 1967-2019 | Monthly: December 2000-April 2021

Mathematically, the chart simply expresses the inverse of the data indicated in our chart showing the ratio of median new home sale prices to median household income as a percentage.

Since 1971, we find the relative affordability of new homes sold in the U.S. have been generally falling over time, which has periodically been punctated by short term periods where either fell faster than median household income, such as during the housing bust of 2006-2009, or when median household incomes rose much faster than new home prices, as in the period from late 2017 to early 2020.

The latest short term downtrend coincides with rapidly escalating prices combined with stagnant income growth. That combination is contributing to the fastest decline in the relative affordability of new homes recorded during the 21st century.

References

U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 5 June 2021.

Political Calculations. Median Household Income in April 2021. [Online Article]. 2 June 2021.

Median Household Income in April 2021

Political Calculations' initial estimate of median household income in April 2021 is $67,788, an increase of $1,542 (or 2.3%) from the initial estimate of $66,248 for March 2021.

The latest update to the chart tracking Median Household Income in the 21st Century shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through April 2021. The inflation-adjusted figures are presented in terms of constant April 2021 U.S. dollars.

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to April 2021

April 2021's jump in median household income is being accompanied with rapidly rising inflation, which is eroding the purchasing power of American households. That observation is brought home in the following chart, where we find that while the year-over-year growth rate of nominal median household income has turned positive, when adjusted for inflation, it is continuing the recessionary decline.

Median Household Income in the 21st Century: Year Over Year Growth Rates, January 2000 to April 2021

Analyst's Notes

The BEA's estimates for aggregate wage and salary data in October 2020 through March 2021 were revised significantly upward from the Bureau's previous estimates. The upward revisions ranged from a low of an increase of 1.1% for October 2020 to a high of 2.2% for February 2021, with March 2021's estimate increased by 2.1%. The revisions suggest a stronger economy in the U.S. than previously reported during this period.

References

Median Household Income in March 2021

Political Calculations' initial estimate of median household income in March 2021 is $66,248, an increase of $244 (or 0.4%) from the initial estimate of $66,004 for February 2021. As expected, this change coincides with the lifting of coronavirus lockdowns imposed by several state and local governments in December 2020.

The latest update to the chart tracking Median Household Income in the 21st Century shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through March 2021. The inflation-adjusted figures are presented in terms of constant March 2021 U.S. dollars.

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to March 2021

While the lifting of lockdown restrictions is a positive development for American households, it is being accompanied with rapidly rising inflation. In the following animated chart, we see that inflation has gained considerable traction in the U.S. since the end of 2020.

Animated Chart: Median Household Income in the 21st Century: Nominal and Real Modeled Estimates from December 2020 through March 2021

With inflation rising faster than the median household income in the U.S., the typical American household has been losing purchasing power during the first three months of 2021.

Analyst's Notes

The BEA's estimates for aggregate wage and salary data in January and February 2021 were revised slightly upward, by 0.08% and 0.11% respectively, from the Bureau's previous estimates.

References

Median Household Income in February 2021

Political Calculations' initial estimate of median household income in February 2021 is $66,004, a reduction of $35 (or 0.05%) from the initial estimate of $66,039 for January 2021. This was the second month-over-month decline for median household income in the U.S. since the coronavirus recession bottomed in August 2020.

The latest update to the chart tracking Median Household Income in the 21st Century shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through February 2021. The inflation-adjusted figures are presented in terms of constant February 2021 U.S. dollars.

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to February 2021

The cause of the recent decline after months of recovery can be found in the renewed lockdown measures imposed by several state and local governments in late November or early December 2020, such as in California, Illinois, New Jersey, New York, and Pennsylvania, to identify the lockdown states with the largest populations. The data for December 2020 had indicated the rebound in median household income was slowing. The data for January 2021 confirms their negative impact. The data for February 2021 shows that negative impact continued.

With the lifting of restrictions on business operations and stay-at-home orders for residents in these states, we anticipate median household income began recovering in March 2021, which we should start seeing in the next update. The lifting of state and local government-imposed lockdown measures will be the primary driver of economic growth in 2021.

Analyst's Notes

For the first time since January 2020, the U.S. Bureau of Economic Analysis (BEA) revised its monthly resident population estimates in March 2021, which affected its estimates for December 2020 (revised downward by 59,000) and January 2021 (revised downward by 164,000).

The BEA's estimates for aggregate wage and salary data underwent a more typical revision for this dataset, with slightly downward revisions affecting the estimates for the months of October 2020 (-0.2%), November 2020 (-0.2%), December 2020 (-0.6%), and January 2021 (-0.9%). The largest adjustments were made in the period where several large population states listed in the section above had imposed lockdown orders as COVID-19 cases within them surged, reducing economic activity.