Eye On The Market Broadcast: Household Incomes And Inflation

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by: Doug Short

I recently had the honor of being a guest on David O. England's Eye on the Market radio broadcast. The first of two segments focused on median household incomes. In particular, I discussed the Census Bureau's most recent data, through 2012, for the 50 states with special attention to Illinois, where David hosts his program.

For a complete overview of the 50 states, see this article. As I shared with David's audience, Illinois ranks right at the middle of the pack, with a median household income in 2012 of $51,738, a tad higher than the national median of $51,017. The rather stunning fact, however, is the real (inflation-adjusted) peak median income for the U.S. was 1999, the same year that eight states, including Illinois, hit their peak median. As of the latest annual data the U.S. median is down 9 percent. Illinois is down a staggering 19 percent. Incidentally, my own home state of North Carolina peaked three years earlier in 1996 and was down 19.9 percent in 2012.

Here is a table showing the states sorted by their 2012 median household incomes, the peak income year and the percent change since the peak.

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Here is a link to the radio segment.

In the second segment I discussed inflation, with some particular focus on why the Bureau of Labor Statistics' Consumer Price Index is such a controversial metric. Why so? In a nutshell, the index is a weighted composite of eight major subcomponents, each comprising a myriad of subcomponents. Individual consumers vary substantially in their consumption of these components. In short, it's not a one-size-fits-all measurement. One of my favorite illustrations of the radical difference in the inflation rate of familiar consumption items is this comparison of the price increases since 1978 for a new car, medical care and college tuition since.

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Here is a link to the radio segment.

I've been asked to rejoin David for a broadcast next month, when I hope to discuss one of my favorite employment topics: The rather dramatic changes in the labor force participation rate by age groups.