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Five Predictions For 2014: #5

Jan. 14, 2014 11:19 AM ET
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Prediction #5: Real Disposable Median Household Income Will Continue to Decline.

My guess is another $300 to $500 reduction.

Here is real disposable median household income for the past six years:

2007 = $56,189
2008 = $55,484
2009 = $53,760...
2010 = $52,703
2011 = $51,557
2012 = $51,371
2013 = $51,500 (author's estimate)

Household income, adjusted for inflation, is down about 8 percent from pre-Great Recession levels. Clearly, households, as measured by median income, are not better off, and the trend continues to point to lower and lower levels, even though we are five years post-recession. Some data sets will show a marginal 2% improvement over the past two years. Other data sets point to continued declines.

My prediction: the median household will not be better off next year; in fact, it will be worse off, because of 1) increasing taxes and their impact on after-tax, take-home pay, and 2) the increased personal costs of ACA health care costs, and 3) commodity price increases to the individual worker.

The saving grace could be a bump in real wages and hours worked, but I am not holding my breath, as hours and wages continue to suffer from persistent employer jitters.

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