Trends in how Americans' incomes are changing can tell us quite a bit about the relative health of the U.S. economy. One of the simplest measures we can follow is the country's average earned wage and salary income per capita. The following chart shows that data from January 2000 through May 2022, covering the 21st century to date:
The chart tracks both nominal and inflation-adjusted income trends. One thing we quickly see is that official periods of recession coincide with significant or sustained declines in average inflation-adjusted earned income (the blue line). Meanwhile, average nominal income, shown in red, either stalls or falls during these periods.
So what does that mean for the state of today's economy? The next chart zooms in the period since December 2020, covering the Biden era:
Here, we see the growth rate of average nominal incomes has notably slowed since December 2021, while inflation-adjusted incomes have sustained declines during this period. What that means is the U.S. economy has definitely slowed during the last two quarters, but the trend for nominal income growth hasn't fully stalled out yet as of the available data for May 2022. Meanwhile, the decline in real earned incomes since December 2021 is consistent with recessionary conditions being present in the U.S. economy during this period.
We should note the underlying income data is subject to revision for many months after it is first reported. The initial estimates for June 2022 will be reported by the U.S. Bureau of Economic Analysis near the end of July. If you want to beat us to the punch in doing that analysis, the References section below provides links to the data you'll need to both replicate and update our results.
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.