U.S. Median Income from 1999-2009: No Gain, Much Pain

The slide below comes from a recently published study by the U.S. Census Bureau and the full report is available here .

One of the highlights from the report is as follows:

The typical American household made less money last year than the typical household made a full decade ago.

David Leonhardt discusses the report in the Economix section of today's New York Times (Sunday, September 13, 2009) and here is just the flavor of what are some disturbing statistics from the Census Bureau's report

Median household fell to $50,303 last year, from $52,163 in 2007. In 1998, median income was $51,295. All these numbers are adjusted for inflation.

In the four decades that the Census Bureau has been tracking household income, there has never before been a full decade in which median income failed to rise. (The previous record was seven years, ending in 1985.) Other Census data suggest that it also never happened between the late 1940s and the late 1960s. So it doesn’t seem to have happened since at least the 1930s.

And the streak probably won’t end in 2009, either. Unemployment has been rising all year, which is a strong sign income will fall.

What’s going on here? It’s a combination of two trends. One, economic growth in the current decade has been slower than in any decade since before World War II. Two, inequality has risen sharply, so much of the bounty from our growth has gone to a relatively small slice of the population.

Comments

[Tom E.:]

Skyrocketing health care costs have been pinching what companies can pay out as well.

Sep 13 07:08 PM

[ironmountain:]

Certainly you might be the few masters who knew the high in past 100 years, and I agree that even institutional traders make stupid mistakes and it is not hard to find plenty of examples of it. However, from a trader's perspective, the trading strategies for the given situation and the executions of those strategies are far more important than knowing the readings on the charts. For instance, when VIX is riding above 90, selling straddle or strangle may have more chance to get away with profit than the buyers of those.

Sep 13 07:13 PM

[ironmountain:]

good

Sep 13 07:57 PM

[mikezq:]

then what is the highest VIX?

Sep 13 08:10 PM

[Jamie M.:]

The article is very misleading. Median household income didn't exactly fall during the decade. As his own statistics in the article show, median income did rise from 1998 to 2007. It only fell below the 1998 level in 2008, because, as we all know, 2008 was a terrible year. This is a one or two year (2008 and 2009) problem, not a decade problem.

Sep 13 09:04 PM

[Cormack:]

Fantastic article and very concise. I've discussed the topic in my blog. cormackcapital.wordpre...

It causes one to revisit Paul Kennedy's, "The Decline of the Great Powers" from more than two decades ago. Also take a look at the piece from more than two years ago concerning the topic of the average thirtysomething at a lower standard of living than his father.

money.cnn.com/2007/05/...

Sep 13 09:20 PM

[The-Stock-M...:]

Statistics apart, the end game would be that things would become more affordable again. As incomes rise, so does inflation, beating the effect of the rising wages. For example: I was glad to buy a $750 GPS (price as of last august) for $300 recently. My income didn't rise but affordability certainly rose.

Sep 14 01:42 AM

[BGRT:]

Where'd all the money go? Oh yes to the top 1% and China and India!

Sep 14 04:51 AM

[Buy and Hol...:]

That works for things that are technology based, like GPS and computers and iPods but what about things that cost more like food and housing. We are definitely paying more for a house than we did ten years ago and our paychecks have not gone up to match.


On Sep 14 01:42 AM The-Stock-Market-Crash... wrote:

> Statistics apart, the end game would be that things would become
> more affordable again. As incomes rise, so does inflation, beating
> the effect of the rising wages. For example: I was glad to buy a
> $750 GPS (price as of last august) for $300 recently. My income didn't
> rise but affordability certainly rose.

Sep 14 08:40 AM

[Scott Croly:]

Any number of long term quants. can be applied to the above phenomenon of 1999 - 2009 declining US median income. Clearly, the Supply Side Cycle was one of dievestiture [sic]/consumption/extr... in quantitatively subjective terms, on a previous and objectively somewhat obsolete cycle; this y meridian earnings line denoument tends to occur over x axis time line when real production forward in a similar a priori model renders relatively smaller real returns (real earnings) with respect to existential human positives, in both multiple and spread differential terms with respect to simple quantitative analysis, as evidence of real production macro-falloff. In other words, the manufacturing era is pretty much finished, inefficient, and obsolete, at least toward typical application. While domestically obvious for years, it has become apparent, and is now evident worldwide. Note the essential switch from corporati model en banque (elephant in the room) over the dievestment [sic] cycle. Collapse, or fall off, is mere subtext of context change. Sadly, with respect to middle income earnings, post World War II is something of a blip, at least in long term comparative. Financing new era incipience (particularly the incoming), is indeed and in fact, a formidable task, and requires tremendous resources not entirely enabled private en banque capital, with somewhat inefficient, indeed obsolete, consolidated, concentrated nominal profit pinnacle, particularly as the cost of "production" in the price model has now become the cost of consumption, largely now, in real terms, by textbook, unoriginal clone (any IP?) FPL hard drive, (no RAM, little cerebral, much "emotional intelligence," ie, largely incapable of FYI/FIO) obsolete, inefficient, extracting, micro-communal, redistributive, "so-yesterday" financially talentless pinnacle dievestors [sic], of the last cycle. De-expedited real capital must be rebuilt through various real dynamic production/earnings, with a priori fiat UCD via money print, forward borrowing/retro-amoriz... with central bank intervention continued short-term; "bought" time enables some wound healing, at least in human terms, then toward real production/innovation (see Long and Great Depression), and animate human resource base and stability is compelled (especially after L/F/S n.s. life=AND, and now remaining high-mileage S/H/S models, during the previous cycle; as in, "Who ya' gonna call, Ghostbustahs?"), more than any other "capital," particularly of the inanimate, static variety. Slow growth real dynamic investment toward efficient product build with appropriate technology application is compelled, at this point. At peak market VLCC 300K daily charter rate + ancillary charges just doesn't cut it, with commensurate deficit/debt onerous/impossible burden with given 2nd Law thrmdynmc Carnot entropy infinite negatives. At least go more domestic and Pu-239. While static capital concerns are certainly engendered herein (specifically market/economy, especially, UCD), of far greater concern, is society. Overseas socioeconomic stability concerns could compel some cash-out; still, USA obviously holds the highest hole card -- we need to thank those folks every day, and to help, in real terms, commensurately. After the some time ago "Lost" Generation invisible capital (ie, leveraged paper) collapse, an era of expansion preparation was entered into by some overseas jurisdictions, toward real acquisition, with commensurate event risk and final severe negative manifestation. En banque, in order to preserve nominal market trade arbitrage, et al, was vicariously compelled to call others to real duty, with real and tragic life love loss. The way to progress (compelled, as is dynamic capital,; currently it is not 09:07edt in Paradise) is infinitely more than a bumpy road for many, and a smooth sail for some few, regardless of the vicarious admonition from the suite that life is a given uneven; we already knew that, in the street. While cycles are never analogue, both x,y, they nevertheless minimally resemble, indeed, are similar. Failure to address HRB herein, can be fatal, especially regarding ER calls to duty (morale?), inspite of tactical drone sufficiency. Regardless, this is eminently clear at this point in the cycle. Context analysis over textbook market application is necessary. Short and medium term will obviously be volatile, with some sell-off this Fall (though US macro-jurisdiction L/F/S citizen (those that still remain) social stability ensures reasonable hold), particularly somewhat centrally encouraged (STCG tax revenue -- typical seasonal consolidated interest hand-hold, wink and nod, especially nominal en banque/PAC cycle, this time with etc./USD along for the ride), large money interest gain in bond purchase (ER, inspite of already severe UCD), with upcoming currency comparative change, then sell-off (with tactical short term Level I - V plays) with subsequent repurchase of lower cost equities, some sector rotation ("the trend is your friend," though overall, still, nominal to real, with price model component 4 final, appropriate application), evident macro and context jurisdiction (with stronger, more stable society with remaining L/F/S citizenry (millenials evolve hereto? ask an actuarial, though this issue likely non-considered, to deep in text...) and DoD (USA DoD is currently the true world economy ensurer; thank you so much guys), those who have been banked on, now, and in the previous cycle) relative positive return. Some concern must be expressed regarding those who allege staff position resume, indeed, their attachment/captain pink/w.c. ghetto responsibility regarding -$20 Trillion previous cycle outcome does not indicate credibility. All of this represents fairly obvious phenomena, though short, and short-medium term trades are difficult, particularly as micro-text nominal market clone staff/house/sinecure segue toward macro-context real economy individual line/field/street, proceeds, already evidenced by a priori relevant industry sector equity positive return to this point. 1930s/1960s/later BB (no draft) birthdate demographic nominal command is obsolete; millenials (HRB) compel real production and earnings dynamic, despite obsolete and inefficient nominal market static capital decrying UCD (USD decline mitigated by the crew (see wage comp. on some critical jobs, ex, EMT, lifeguard, ave. comp $9/hr), not the previous, still intransigent, now obsolete, inefficient, welfared, micro-communal/socialist, margin-strippers of real investment, un-American, anti '34 SEC C. Bligh commissioned caste) on the way toward at least some potential dynamic capital real economy endeavor with commensurate real investment/production/... Supply Side Cycle, and most application therefrom, was complete some time ago. Nominal market does not equal real economy (ex.: nominal micro-socialist NYC admin. on EUR/USD currency Forex arbitrage, with DEU bank carry, RP, CDS, and other machination, among other artifice, is impossible at this point). Obviously, nominal is finished, real is incoming, otherwise...

Sep 14 10:13 AM

[Sumit Batra:]

Ok free trade good for USA. All the big companies CEO’( Fatter profit) and politician ( lobbyists)says. Huh, What about American public. USA hasn’t created a single job in the last 10 year and prices( commodities) has gone through the roof. I guess that’s what free trade do to a country. A rising living standard of the world at the expense of US consumer. So we are exporting our living standard and importing misery

Sep 14 11:06 AM

[Gary A:]

In my view, if the Fed expects to pump us out of deflation with an asset inflation, the pinched consumer will just not buy. Milk got to 5 bucks a gallon and the roof caved in. People won't drive if gas starts going up again. You only have so much money available to the consumer who has no raises.

I see this pumping of the Fed as a futile excercise that will not gain the desired effect of a market that grows on its own. Unless companies are willing to pay more, or the cost of living goes down through deflationary pressures, people will not spend more.

Sep 14 11:08 AM

[Gregman2:]

It would be interesting to compare this with a reliable data set from China and separate aggregate of emerging economies.

Sep 14 03:41 PM

[Cormack:]

Take a look at what John Williams of shadowstats.com just posted today by comparison.

- Real Median Household Income in 2008 Fell Below 1973 Level
- Income Dispersion Intensified in 2008
- Restricted Income and Credit Expansion Inhibit Economic Growth
- Economic Crisis Is Far from Over

"Consumer Liquidity – Special Report"

Sep 14 11:20 PM

[437339:]

Sumit Batra ,

The IMF bank posted about a year ago " That worlwide wages must mean parity ".Yes , this means misery + poverty for US workers + rising standards of living for the emerging nations . Welcome to the One World Order , this IS precisely wants the Illuminists Bankers want . All power , wealth in the hands of the Few at the top .This was started in 1999 , when the Ulluminists passed the torch to China , with the Nafta agreements . Jobs have been leaving the US in droves since . The CEO's wanted more profits , can't have this in US , if they have to pay a living wage .

Oct 07 08:07 PM