I was looking at the new earnings data released by the BLS this morning, which shows real average income for all workers declining 0.6 percent year over year. Realistically speaking, this means that earnings are flat for people with jobs. People without jobs, who aren’t included in the survey, are likely much worse off in general.
We might also keep in mind that when making year over year comparisons, that March 2009 was just a few months after the panic of 2008, so to have had so little improvement compared to the early months of 2009 is a grim commentary indeed.
Also, when thinking about household debt, unemployment, and continued increases in the price of gasoline (which rose 15 percent over the last 6 months), household budgets in America are in extremely dire straits.
If this were only a short term phenomenon, it would be one matter, but when looking at what has happened over the past decade, the continued malaise is really just more of the same in spite of the fact that it was masked by a brief bubble in the middle of the decade.
For example, American median household income in 1998 (adjusted for inflation) was $51,295. Ten years later, in 2008, it was $50,303. Over the same period, household debt increased 139 percent.
Now come the years of de-leveraging with stagnant incomes, which will be painful.
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This trend becomes even more alarming if we look at the rate of inflation as calculated by the old government methonds (which have been revamped several times to lower the rate). On that basis real household income has declined fairly dramatically over the last ten years. These inflation figures can be found at shadowstats.com by John Williams. This is a very interesting site for historical statistics untainted by political realities.
I hope all we face is years of deleveraging. As it is we are defaulting on our promises left right and center by basing our COLA’s on the current statistics which show inflationat close to zero as opposed to the rate calculated by Mr. Williams (currently about 9.7%). Frightening.
Please don’t cite household income as the basis for any serious argument.
The only figure that matters is individual income; households are smaller than they once were.
Individual income is up about $12,000 during the same period.
Craig, according to the US Census website. Household size was 2.59 people/house in 2000 and 2.61 in 2006 – 2008. Where do you find that households are smaller?
http://factfinder.census.gov/servlet/ACSSAFFFacts?_event=&geo_id=01000US&_geoContext=01000US&_street=&_county=&_cityTown=&_state=&_zip=&_lang=en&_sse=on&ActiveGeoDiv=&_useEV=&pctxt=fph&pgsl=010&_submenuId=factsheet_1&ds_name=DEC_2000_SAFF&_ci_nbr=null&qr_name=null®=&_keyword=&_industry=
Craig, you’re wrong. They’re smaller than they were 40 years ago. There’s no relevant different with 10 years ago at all.
And even if they were different, using per capita income would still be useless because per capita income is much less helpful in making judgments about rents or any other household expense. No one uses per capita income in policy making anywhere that I’ve ever encountered, and for good reason.
“If this were only a short term phenomenon, it would be one matter, but when looking at what has happened over the past decade, the continued malaise is really just more of the same in spite of the fact that it was masked by a brief bubble in the middle of the decade.
For example, American median household income in 1998 (adjusted for inflation) was $51,295. Ten years later, in 2008, it was $50,303. Over the same period, household debt increased 139 percent.”
Can you please cite the sources from where you derived these figures?
The income data is from the 2008 report on income poverty and health insurance by the Census bureau. The debt info is form the St Louis Fed’s statistical web site called “FRED.”
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