Category Archives: median household income

September 2017 Median Household Income

Median household income in the U.S. rose to to $58,523 in September 2017, up nearly 0.2% from our previous estimate of $58,419 for August 2017. The following chart shows our estimates for the trends for both nominal (red) and inflation-adjusted median household income (blue) from January 2000 through September 2017.

Median Household Income in the 21st Century: Nominal and Real Estimates, January 2000 to September 2017

In terms of current U.S. dollars, the most recent trend for median household income in the U.S. has been slowly rising since January 2017. However, after adjusting the nominal income data to be in terms of inflation-adjusted, constant September 2017 U.S. dollars, we can see that since January 2017 has trended mostly flat until recent months, where it has recently dipped thanks to the higher rates of inflation recorded since July 2017.

We believe that most of that change reflects recent increases in the price of oil following the supply disruption of domestic U.S. production following Hurricane Hugo combined with an increase in foreign demand since the end of June 2017, which has reversed what had been a downward trend for these prices.

The methodology for the approach we've developed to generate these median household income estimates is described here. In generating inflation-adjusted portion of the Median Household Income in the 21st Century chart above, we've used the Consumer Price Index for All Urban Consumers (CPI-U) to adjust the nominal median household income estimates for inflation, so that they are expressed in terms of the U.S. dollars for the month for which we're reporting the newest income data.

Notes

For the just released personal income data, the BEA revised the figures for just the previous two months from their previously reported levels, which we've updated in this month's chart. As in previous months (or at least since June 2017 when we began posting our monthly estimates of median household income, the magnitude of the revisions continue to be tiny (on the order of +/-0.04%), with minimal impact to our estimates from one month to the next.

On a final note for this month, we discovered that our monthly median household income estimates have been incorporated into Requisite Press' Auto Buyer's Affordability Index, which they indicate is "a consumer-focused measure of average new-car price affordability. The purpose of the index is to provide regular, on-going consumer awareness of affordability considerations for improved household financial health."

Kind of like what we do for median new home sale prices in the U.S., but for cars - check it out!

Data Sources

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 October 2017. Accessed: 30 October 2017.

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 October 2017. Accessed: 30 October 2017.

U.S. Bureau of Labor Statistics. Consumer Price Index for All Urban Consumers: All Items, Monthly, Not Seasonally Adjusted. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 13 October 2017. Accessed: 30 October 2017.

August 2017 Median Household Income

Median household income in the U.S. rose to ticked upward to $58,419 in August 2017, up slightly from our previous estimate of $58,340 for July 2017. The following chart shows our estimates for the trends for both nominal and inflation-adjusted median household income from January 2000 through August 2017.

Median Household Income in the 21st Century: Nominal and Real Estimates, January 2000 to August 2017

In terms of current U.S. dollars, the most recent trend for median household income in the U.S. has been slowly rising since January 2017. However, after adjusting the nominal income data to be in terms of inflation-adjusted, constant August 2017 U.S. dollars, we can see that since January 2017 has trended flat after having slowly declined from its most recent "real" peak at the beginning of 2016. Our estimates of median household income since January 2000 indicate that this measure of the well-being of the typical American household has not recovered to the peak levels recorded in either late 2000 with the peak of the Dot-Com Bubble or the peak that was reached during the Great Recession that coincided with the failures in the U.S. automotive and financial industries in the last quarter of 2008.

The methodology for the approach we've developed to generate these replacement estimates is described here. In generating inflation-adjusted portion of the Median Household Income in the 21st Century chart above, we've used the Consumer Price Index for All Urban Consumers (CPI-U) to adjust the nominal median household income estimates for inflation.

Notes

Our estimates differ from the recently reported estimates of median household income that were produced for the calendar year of 2016 by the U.S. Census Bureau. We believe that the differences are largely attributable to changes in the questionnaire that the Census Bureau uses to collect income data as part of its Current Population Survey's Annual Social and Economic Supplement (ASEC). The new questionnaire replaced the older survey in March 2015, where the income data compiled by the Census from the redesigned ASEC has consistently indicated higher levels of household median income than what was determined through the previous version of the questionnaire.

Since our estimates are largely based on data that was collected and reported using the previous version of the survey in the preceding 15 years, they are therefore more in line with the Census Bureau's older survey methodology. As more of the post-March 2015 data becomes available, we'll adapt and modify our approach to track it.

Data Sources

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 September 2017. Accessed: 29 September 2017.

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 September 2017. Accessed: 29 September 2017.

U.S. Bureau of Labor Statistics. Consumer Price Index for All Urban Consumers: All Items, Monthly, Not Seasonally Adjusted. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 14 September 2017. Accessed: 29 September 2017.

Relative Unaffordability of New Homes Near All Time High

Following our analysis that indicates that the market for new homes in the U.S. is showing signs of topping out, we can also report that the median cost of a new home with respect to the median household income of a U.S. household is at or near an all time record.

The following chart shows the ratio of the trailing twelve month averages of median new home sale prices to our estimates of monthly median household income peaked in July 2017.

Ratio of Trailing Twelve Month Averages for Median New Home Sale Prices and Median Household Income, Annual: 1967 to 2016 | Monthly: December 2000 to August 2017

The trailing year average median price of new homes sold in the U.S. has risen to be 5.45 times the trailing year average of our estimate of median household income through July 2017. Preliminary data for August 2017 suggests the ratio has slightly declined with the median sale price of a new home having significantly declined from the previous month, but that figure will be subject to several revisions during the next several months, where we've found that later revisions for this data are most frequently revised upward before being finalized.

Data Sources

U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [PDF Document]. Accessed 27 September 2017.

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: 1 September 2017. Accessed: 1 September 2017.

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: 1 September 2017. Accessed: 1 September 2017.

Sentier Research. Household Income Trends: January 2000 through May 2017. [Excel Spreadsheet with Nominal Median Household Incomes for January 2000 through January 2013 courtesy of Doug Short]. [PDF Document]. Accessed 22 June 2017. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars.]

Visualizing the U.S. Distribution of Income in 2017

The U.S. Census Bureau has published its annual report on Income and Poverty in the United States, which we've used to visualize the cumulative distribution of income for U.S. individuals, families and households in the following animated chart!

Animation: Cumulative Distribution of Total Money Income for U.S. Individuals, Families, and Households in 2016

The cumulative income data applies for the 2016 calendar year, which the Census Bureau collected through its March 2017 survey sample, which they processed and published on 12 September 2017. Income data for the 2017 calendar year will not be collected until March 2018 and not published until September 2018.

If you would like to see static versions of the cumulative income distribution charts in the animation above for individuals, families and households, we can accommodate you! If you would like to estimate where you fall on the the income distribution spectrum in the U.S. using these charts, all you need to do is find your income on the horizontal axis, trace a vertical line up to where it intercepts the curve on the graph, then trace a horizontal line to the left side of the chart where you can roughly approximate your income percentile ranking on the vertical scale.

If you would like a more precise estimate, we have updated our "What Is Your Income Percentile Ranking?" tool with the 2016 income distribution data. Our tool can also estimate what your income percentile would have been in any calendar year from 2010 through 2015.

July 2017 Median Household Income

For July 2017, our estimate of nominal U.S. median household income ticked upward to $58,340 from our previous estimate of $58,258 for June 2017. The following chart picks up on the format that Doug Short pioneered using the median household income estimates originated by Sentier Research, who terminated their coverage after reporting the data for May 2017.

Median Household Income in the 21st Century: Nominal and Real Estimates, January 2000 to July 2017

In terms of current U.S. dollars, the median household income in the U.S. has been slowly rising since January 2017. However, after adjusting the nominal income data to be in terms of inflation-adjusted, constant July 2017 U.S. dollars, we can see that the trend since January 2017 has been flat after having trended slowly downward from its most recent "real" peak at the beginning of 2016. Our estimates of median household income since January 2000 indicate that this measure of the well-being of the typical American household has not recovered to the peak levels recorded in either late 2000 with the peak of the Dot-Com Bubble or the peak that was reached during the Great Recession that coincided with the failures in the U.S. automotive and financial industries in the last quarter of 2008.

The methodology for the approach we've developed to generate these replacement estimates is described here. In generating the July 2017 update for the Median Household Income in the 21st Century chart above, we've used the Consumer Price Index for All Urban Consumers (CPI-U) to adjust the nominal median household income estimates for inflation.

Notes

The BEA revised its aggregate wage and salary personal income data for the period from January 2017 through June 2017. For June 2017's revised data, our methodology produces an estimate for median household income of $58,266, which is just $8 higher than our previous estimate for that month.

Data Sources

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: 31 August 2017. Accessed: 31 August 2017.

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: 31 August 2017. Accessed: 31 August 2017.

U.S. Bureau of Labor Statistics. Consumer Price Index for All Urban Consumers: All Items, Monthly, Not Seasonally Adjusted. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 11 August 2017. Accessed: 31 August 2017.