Category Archives: median household income

Median Household Income in August 2022

Political Calculations' initial estimate of median household income in August 2022 is $78,075, an decrease of $457 (or 0.58%) from the initial estimate of $78,532 in July 2022.

But that's only because the Bureau of Economic Analysis released its annual revision of its aggregate wage and salary data on 30 September 2022. The revision affect its data going back for several years, with July 2022's data undergoing the biggest change. The data revision reduced our estimate of median household income for July 2022 by $1,000 to $77,532. After that adjustment, we find that median household income in August 2022 rose by $543, or 0.7% from July's revised level.

We'll have more discussion about the revision in the analyst's notes. The latest update to Political Calculations' chart tracking Median Household Income in the 21st Century reflects the results of that revision, showing the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through August 2022. The inflation-adjusted figures are presented in terms of constant August 2022 U.S. dollars.

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to August 2022

After the income data revision, we can confirm the first half of 2022 saw median household income decline in real terms, coinciding with a technical recession for the U.S. economy, in which inflation-adjusted GDP fell during this period as well. Median household income has rebounded in the months since, coinciding with low-to-negative month-to-month changes in the Consumer Price Index.

Analyst's Notes

In its latest data release, the BEA made significant adjustments to its aggregate wage and salary data from January 2017 through July 2022. The effect of the data revision can be divided into two periods. The first period runs from January 2017 through February 2021 and is characterized by very small revisions. Most notably, income data for 2020 was revised upward by as much as 0.2% in some months, though most adjustments were much smaller.

The period from March 2021 through July 2022 is much different. Here, the adjustments were all in one direction: down. The smallest was in March 2021, which rounds to 0.0%, but the revisions progressively grow larger each month until July 2022, which was revised down by 1.3%. This period directly coincides with the inflation unleashed by President Biden's spending programs.

The following chart illustrates the effect of all the data revisions on Political Calculations' estimates of median household income. The dark gray data series represents the estimates "before" the revision, the orange data series represents the "after" revision estimates:

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to August 2022

The negative adjustment in median household estimates from March 2021 through July 2022 means that President Biden's inflation has been less affordable for the typical American household than previously indicated since it began.

For the latest in our coverage of median household income in the United States, follow this link!

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: 30 September 2022. Accessed: 30 September 2022.

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: 30 September 2022. Accessed: 30 September 2022.

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: 13 September 2022. Accessed: 13 September 2022.

Comparisons of U.S. Median Household Income Estimates

The U.S. Census Bureau has released its annual estimate of the median income earned by the United States 131,202,000 households in 2021. At $70,784, the annual income earned by a typical American household increased by $2,774 (or 4.1%) from 2020 to 2021. Adjusted for President Biden's inflation however, real median household income fell by $402 year-over-year from 2020 in terms of constant 2021 U.S. dollars.

We've added the U.S. Census Bureau's annual data to our chart comparing the various available sources for U.S. median household income data that track this demographic characteristic on a monthly basis. The updated chart compares their nominal, noninflation-adjusted estimates over the period they overlap from January 2006 through July 2022.

Comparing U.S. Median Household Income Estimates, January 2006 - July 2022

In incorporating the U.S. Census Bureau's annual data in this chart, we've annotated the anomaly for 2019's median household estimate. Here, the Census Bureau's median household income estimate for 2019 was greatly impacted by the arrival of the coronavirus pandemic in March 2020, coinciding with the period in which it surveyed U.S. households about the income they earned in 2019. Lockdown measures imposed by several state goverments, including the high population states of California and New York, blocked the Census Bureau from successfully collecting as much data as they intended, particularly from lower-income earning households. In a working paper, Census Bureau analysts confirm the coronavirus pandemic reduced the number of responses to the Annual Social and Economic Survey used to collect household income data, which they believe biased the median household income figure upward by 2.8%. Our chart shows both the Census Bureau's reported figure of $68,703 and indicates the adjusted figure of $66,779 for that year.

Comparing the Census Bureau's annual estimates with the monthly estimates, we find that all these estimates range within a few percent of each other from January 2006 through October 2018. After that point, there's a major divergence between the Atlanta Fed's estimates and the others, where we continue to note the following three differences:

  1. The Atlanta Fed's estimates understate the rising trend for median household income observed in 2019.
  2. They also completely miss the impact and recovery from the coronavirus recession in 2020.
  3. They significantly understate the robust growth in median household income we've observed since March 2021.

That difference, particularly with the U.S. Census Bureau's annual data, is growing much more substantial as time passes.

Political Calculations' estimates of median household income generally tracks with Sentier Research's estimates up through the period where they terminate in December 2019. The analysts who founded Sentier Research after retiring from the U.S. Census Bureau went on to permanently retire in 2020. Sentier Research is no longer an operating entity.

For the latest in our coverage of median household income in the United States, follow this link!

The Bureau of Economic Analysis will soon be releasing a major revision of its historic income data. Since Political Calculations uses this data in generating its monthly household income estimates, the chart above represents a snapshot of our estimates compared with other sources "before" the revised data becomes available.

References

Federal Reserve Bank of Atlanta. Home Ownership Affordability Monitor (U.S. Census Bureau American Community Survey One-Year Estimates of Median Household Income, Projected to Indicated Month by Atlanta Fed Staff using additional data produced by the Current Population Survey and Decennial Census). [Online Database]. Accessed 23 September 2022.

Sentier Research. Household Income Trends: January 2000 through December 2019.  [Excel Spreadsheet with Nominal Median Household Incomes for January 2000 through January 2013 courtesy of Doug Short]. [PDF Document]. Accessed 6 February 2020. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars.] Note: Sentier Research is no longer an operating entity, we've linked to the Internet Archive's copy of this final report.

Political Calculations. Median Household Income in July 2022. [Online Article]. 1 September 2022.

U.S. Census Bureau. Historical Income Tables: Households. Table H-5. Race and Hispanic Origin of Householder -- Households by Median and Mean Income. [Excel Spreadsheet]. 13 September 2022.

Jonathan Rothbaum and Adam Bee. Coronavirus Infects Surveys, Too: Survey Nonresponse Bias and the Coronavirus Pandemic. U.S. Census Bureau Working Paper Number SEHSD WP2020-10. [PDF Document]. 30 March 2021.

Update 2 October 2022

The BEA's annual data revision for 2022 has been released. It's much smaller in scale and scope than it might have been, covering the period from January 2017 through July 2022. We created the following animation to show how the revision changed Political Calculation's median household income estimates over this period.

Animation: Comparing U.S. Median Household Income Estimates from January 2006 - July 2022, Before and After 2022 BEA Data Revision

The effect of the data revision can be divided into two periods. From January 2017 through February 2021, the size of revisions were very small, with data during 2020 seeing the largest changes in the form of upward revisions with a magnitude of +0.2%. Much larger changes are concentrated in the period from March 2021 through July 2022 however, which were revised downward by progressively increasing amounts. The smallest revision in this second period was for March 2021, which was unchanged, the largest revision was for July 2022, which was reduced by $1,000. We'll have more analysis when we present the median household estimate for August 2022 on 4 October 2022.

Median Household Income in July 2022

Political Calculations' initial estimate of median household income in July 2022 is $78,532, an increase of $651 (or 0.84%) from the initial estimate of $77,881 in June 2022.

The latest update to Political Calculations' 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 July 2022. The inflation-adjusted figures are presented in terms of constant July 2022 U.S. dollars.

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to July 2022

July 2022 saw the typical American household gain positive traction with respect to inflation for the first time in months. Unfortunately, even with that development, there has still virtually been no real growth in median household income for the year-to-date.

Analyst's Notes

In its latest data release, the BEA made minor upward adjustments to its aggregate wage and salary data for April (+0.009%), May (+0.025%), and June 2022 (+0.169%).

Looking forward, the BEA will be making its large, annual revision to its historic aggregate income data at the end of September 2022. When released, this data may have a major impact on both our estimates and how we assess whether the U.S. economy went into recession in the first half of 2022.

For the latest in our coverage of median household income in the United States, follow this link!

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: 26 August 2022. Accessed: 26 August 2022.

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: 26 August 2022. Accessed: 26 August 2022.

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: 10 August 2022. Accessed: 10 August 2022.

Median Household Income in June 2022

Political Calculations' initial estimate of median household income in June 2022 is $77,881, an increase of $616 (or 0.82%) from the initial estimate of $77,265 in May 2022.

The latest update to Political Calculations' 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 June 2022. The inflation-adjusted figures are presented in terms of constant June 2022 U.S. dollars.

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to June 2022

Once again, inflation eroded all of the nominal month-over-month gain for American households in June 2022. For the year-to-date, there has virtually been no real growth in median household income.

Developing Recessionary Conditions

In developing our median household income estimates, we track average earned income per capita as a separate metric. This measure is more sensitive to changing economic conditions, which makes it useful for taking the proverbial temperature of the U.S. economy. Since the Bureau of Economic Analysis has reported the U.S. experience a second consecutive quarter of negative real economic growth in the second quarter of 2022, we thought we'd present it in this edition of our median household income series.

The following chart shows the average earned wage or salary income per capita in the twenty-first century:

Average Individual Earned Income in the 21st Century: Nominal and Real Estimates, January 2000 to June 2022

This chart covers three officially declared recessions for the U.S. economy. In each, the nominal (or actual) earned income either stagnated or declined during these periods, while the real (or inflation adjusted) earned income experienced sustained or deep declines. For this recent history, the official periods of recession more closely coincide with the sustained or deep declines observed in the inflation-adjusted income data.

Now, let's take a closer look at the most recent data. The third chart shows average individual earned income during the Biden era.

Average Individual Earned Income During Biden Era: Nominal and Real Estimates, December 2020 to June 2022

This chart conveys the inflation-adjusted average earned income per capita peaked in December 2021 before a sustained decline that now extends to June 2022, which is consistent with how this measure has behaved during previous recessions. At the same time, the rate at which the nominal average earned income for individual Americans grows has decelerated. This combination is signaling recessionary conditions are building in the U.S. economy.

The way to read this data is that the inflation adjusted data is voting "Yes, the U.S. economy is in recession", while the nominal income data is voting "Maybe". If you want the Magic 8-Ball answer, the average earned income data is saying "Ask again later" while leaning toward "It is certain".

Analyst's Notes

The BEA made minor downward adjustments to its aggregate wage and salary data for April (-0.083%) and May 2022 (-0.062%).

Looking forward, the BEA will be making its large, annual revision to its historic aggregate income data at the end of September 2022. This data, when released, may have a major impact on how we assess whether the U.S. economy went into recession in the first half of 2022.

For the latest in our coverage of median household income in the United States, follow this link!

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: 29 July 2022. Accessed: 29 July 2022.

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: 29 July 2022. Accessed: 29 July 2022.

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: 13 July 2022. Accessed: 13 July 2022.

Median Household Income in May 2022

Political Calculations' initial estimate of median household income in May 2022 is $77,265, an increase of $702 (or 0.92%) from the initial estimate of $76,563 in April 2022.

The latest update to Political Calculations' 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 2022. The inflation-adjusted figures are presented in terms of constant May 2022 U.S. dollars.

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to May 2022

Inflation eroded all of the nominal month-over-month gain for American households in May 2022. For the year-to-date, there has virtually been no real growth in median household income.

Analyst's Notes

The BEA made minor downward adjustments to its aggregate wage and salary data for the first four months of 2022. The revisions affected the estimates for January 2022 (-0.015%), February 2022 (-0.016%), March 2022 (-0.005%), and April 2022 (-0.025%).

For the latest in our coverage of median household income in the United States, follow this link!

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: 30 June 2022. Accessed: 30 June 2022.

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: 30 June 2022. Accessed: 30 June 2022.

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: 10 June 2022. Accessed: 10 June 2022.