Last week the Census Department released real median household income for 2023. Let’s investigate. 
The Census Department reports Median Income of Non-Hispanic White Households Increased While Asian, Black and Hispanic Median Household Income Did Not Change
Real median household income rose to $80,610 in 2023, the first annual increase since 2019 before the COVID-19 pandemic, according to a U.S. Census Bureau report released today.
The 2023 median incomes of Hispanic ($65,540) and Black ($56,490) households were not statistically different from 2022 and remained the lowest among all race and ethnic groups.
Real means inflation adjusted.
Real Median Income Chart Comments
- Real median income rose a total of 1.7 percent for 18 years between 1989 and 2012, less than a tenth of a percent per year. But that does not factor in home prices or property taxes.
- Between 1999 and 2012, real median income fell 6.3 percent.
- In a stunning period between 2012 and 2019 real median household income allegedly rose 23.5 percent. Janet Yellen perceived this as her biggest failure.
Yellen’s Only Regret as Fed chair: Low Inflation
Flashback December 13, 2017: Yellen’s only regret as Fed chair: Low inflation
At her final news conference as Fed chair Wednesday, Yellen said the Fed’s failure to bring inflation up to the central bank’s 2 percent mandate is her single disappointment.
“We have a 2 percent symmetric inflation objective. For a number of years now, inflation has been running under 2 percent, and I consider it an important priority to make sure that inflation doesn’t chronically undershoot our 2 percent objective,” she said.
For years, various Fed officials commented on the need to make up for lack of prior inflation.
The only time consumers got ahead is when the Fed failed to produce the inflation it wanted!
Factoring in house prices and taxes, one can debate how much consumers really benefitted, but inflation only benefits those with first access to money (the banks, government, and the already wealthy).
Economic Challenge to Keynesians
Of all the widely believed but patently false economic beliefs is the absurd notion that falling consumer prices are bad for the economy and something must be done about them.
I have commented on this many times and have been vindicated not only by sound economic theory but also by actual historical examples.
My Challenge to Keynesians “Prove Rising Prices Provide an Overall Economic Benefit” has gone unanswered.
There is no answer because history and logic both show that concerns over consumer price deflation are seriously misplaced.
BIS Deflation Study
The BIS did a historical study and found routine deflation was not any problem at all.
For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?
“Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the study.
It’s asset bubble deflation that is damaging. When asset bubbles burst, debt deflation results.
Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse.
– Falling consumer prices are bad for the economy.
> This fallacy notion has always been a sore spot for me personally as well. There is not any reason I can “Logically” come up with, that would support this crazy notion! Consumers, Consume! How is consuming the same, at a lesser cost, NOT A Good Thing? For the Consumer, and most certainly the Economy, as a result? Maybe a “Word Salad” answer from Kam would fit nicely in the mix of explanations?
> Your Challenge: “Prove Rising Prices provide an overall economic benefit” It Can’t Be Done! You and I and Countless Others, can come up with a Countless Amount of reasons Why It Doesn’t, but not A Real Reason why it does…
Q1) Does it take Money from the Government? Absolutely, which is a great thing, and less they can keep spending, and driving Inflation further through the roof!!! The Government should have a “Mandated Balanced Budget” (Amendment on the table for immediate signature approval)!
Q2) Why is there Never Any Money left over from Any Government Projects? Are ALL Government Projects guessed, er… I meant, Calculated Out Perfectly? Never, ever are they Under Budget? Are they Always Over Budget? I often see request for additional funding for ALL Projects, but nary do I see Money Given Back from Any Projects? Do You? If so, Where, When, and Why, because I already don’t buy it, if you have adequate answers for this question. It will be Revised Later and added back in, or not needed, but spent someplace else…
“Your Challenge: “Prove Rising Prices provide an overall economic benefit” It Can’t Be Done! You and I and Countless Others, can come up with a Countless Amount of reasons Why It Doesn’t, but not A Real Reason why it does…“
That depends on whether you are the producer or the consumer. Are you the exporter or the importer?
The Saudis produce a lot of oil. They export more of it than they consume. The higher the price of oil, the more it benefits Saudi Arabia. In fact high prices elsewhere allow them to subsidize low prices at home.
The US is approaching a similar situation with natural gas. We are exporting more of it every year as LNG. The higher price our companies receive for this export allows them to offset the low prices they get in the US.
But what about, the higher the price of oil, the less people will be able to afford it, so less demand? Seems some people think expensive housing is good but now we have really low home sales and some people just buying necessities, little to no discretionary. Some look at inflation in terms of savings. People who just want to keep their savings in cash shouldn’t have to worry about the purchasing power of it eroding. Seems it would be better if the money supply was kept in proportion with the amount of goods and services available.
For that same article, Yellen also said, “I feel good that the labor market is in a very much stronger place than it was eight years ago.” With its dual mandate, the Fed tries to fight inflation and/or to maintain high employment (depending on which is most problematic at any given time). In the 2012-2019 period (until COVID), employment increased and real median household income increased. Isn’t that a good thing?
Sounds good to me. But many here will tell you any stats that portray a positive aspect of the economy are faked or rigged. While negative stats are true and indicate a depression is right around the corner.
Glad to see you revisiting this talking point about price deflation. Your comments are spot on, but government can’t handle decreasing tax revenue. That’s why you are talking to a wall with these articles, since government has its hands on the levers. Their motto is, “inflate prices or bust!”, and it is literally true with respect to their selfish interest. The second tax revenue first comes in, it’s spending is already amortized for years to come on sunk costs.
MIT 2024/25 cost $86,000, but it’s cheaper than Stanford $93,000/y. Let’s make a deal : I will buy u a Tesla model 3 if u go to a state college instead of MIT.
Disagree. There is nothing magical about 0% inflation or even deflation. It does not mean that people will be any better off than with 2% inflation.
From 1995 to 2023 Japan experienced 0% inflation. Twenty eight years of it. Real wages declined 11 % in the same time period. The average person was not better off; they were worse off.
What matters is what each individual does to improve their personal situation, no matter what is happening around them.
My message remains the same: Focus on what you can actually control. Do what you can to improve your personal situation. No government or central bank will ever make as much of a difference in your life as you will.
Very well said Papa…Bill Gates, Michael Dell, Steve Jobs, and even Oprah all had to deal with the exact same Fed and the exact same framework as everyone else. People here waiting on Fed/No-Fed/Trump/Harris/Santa Claus/Magical Deity to come rescue them will be waiting a very long time for nothing.
And when the social security cuts come they are going to be even poorer and sadder and blame it on the immigrants.
The money train this week (IWM) has been exceptionally loaded with profits.
…..$……$
Agree. I find it difficult to understand. So many here would prefer to complain about their situation and wait for Trump or Harris to save them. Day after day, year after year.
Sorry folks. No politician is going to make your life better. Time to get off your ass and do it yourself.
Unlike some people here, some of us do NOT brag. If you haven’t noticed, few comments are made about portfolio returns over time
Oh. Boo hoo hoo. Little crybaby.
Feeling guilty about all the whining you do?
Maybe you should read what I said again. “Get off your ass and make a better life for yourself.” If that’s what you call bragging, then I am guilty as charged.
I don’t consider it bragging, but more informative, and maybe for me to take a look at. In this case I did, and made money and still am.
How did you fare? Did you analyze and review the shared information? I bet you made money if you did, or didn’t if you didn’t obviously.
Not that all opinions are profitable or even good advice, but all are worth looking into as I see it. I guess I could watch TV all day, or listen to Music, which I love, but you need to look after yourself too? Take well thought out, and investigated ideas and run with them here and there. You too may talk about your portfolio, in no time at all…
Good Luck!!!
Illegals can collect DISI, you know.
Actually, Illegals are reinforcing SS.
https://thebadgerproject.org/2024/07/08/illegal-immigrants-are-reinforcing-social-security-not-draining-it/amp/
Though I agree with MPO. Why rely on shaky SS in the first place? You are better to build your wealth to the point where SS doesn’t matter to you, in case they cut it.
If you are someone who thinks the government messes everything up, you sure as hell shouldn’t be relying on SS.
LMAO. Do you not understand that your simple analysis would affect an investment decision? That by understanding this stuff, some people are able to place their money to greater financial advantage. The same is true in the US. You don’t have to CONTROL it, but by talking about it, people might understand its impact
Nope. Don’t understand what you just said. You need to explain it better. Because it sounds like you are agreeing with me.
I said:
“ You are better to build your wealth to the point where SS doesn’t matter to you, in case they cut it.”
You said
“ That by understanding this stuff, some people are able to place their money to greater financial advantage.“
Good historical example of low inflation not being all positive
Context is always important
Yes. The most recent US example of deflation was during the Great Depression (1930-33).
Thanks.
Key Point: What matters is what each individual does to improve their personal situation, no matter what is happening around them.
Bingo!!! Well stated!
Thanks Stu. Look at MikeC711. In his youth he suffered through high inflation and 20% mortgage rates. Did he sit back and complain? Or did he get his ass to work to build a good life in spite of what was happening around him?
Life is hard. Making a good life is hard work. But at least we live in one of the best countries in the world to give you an opportunity to succeed.
Isaac Newton discovered gravity sitting under an AAPL tree.
The Dow made a new all time today. On Wed the Fed will cool it down.
“The Dow made a new all time today. On Wed the Fed will cool it down.”
Yes with a rate cut – likely 50 basis points
Maybe for a very short period of time, but that’s it. Then it is off to the moon.
It would be interesting to see where the 23.5% real growth came from: regionally, by race, and by income segment (low, middle, upper class)
50% Discount/Rebate policy at retail sale implements the libertarian wet dream of beneficial price and asset DEFLATION. Just do the simple 6th grade math and the simple but powerful accounting operations of equal debits and credits summing to zero. Toss in the 50% Gift to the Banks/Debt Jubilee policy at point of loan signing and we’ll be able to end Finance Capitalism and rejuvenate and ethically ascend Industrial Capitalism.
It’s gone from faux debt to magic money. Where will it end?
The suffering and instability for all economic agents won’t end until we integrate the new monetary paradigm of Gifting into the Debt Only system. Its too simple for the intellectual vanities of the erudite, too resolving of our deepest macro-economic problems not to be a paradigm change.
This is a joke . . . Loss of purchasing power is far greater than any increase in real median household income . . .
Real income up 4.3% up in 5 days for those that bought IWM last week. Where the heck is Michael Engel?
I can’t wait to see the price action after the fed meeting on Wednesday.
Keynes was addressing the deflation that occurred during the 30s. It was an utter collapse of prices due to the excesses of speculation, credit, wealth and income inequality, property bubble in Florida, lack of regulation, banksters, conglomerate concentration, et al.
John Kenneth Galbraith’s seminal book on the Great Depression is still the best study on the worst deflationary cycle in the 20th Century.
Keynes today would not recognize how the neo-Keynesians have bastardized his economic theories. They are called neoliberals and have disguised themselves as supply siders such as Laffer and his trickle down economics, or Krugman’s contemptible support of Clinton’s and Obama’s economic policies.
Keynes was not infallible. Some of his theories when applied in the real world did not succeed and some failed. But as the Keynes would acknowledge if he were alive today he would’ve changed his mind.
“When the facts change, I change my mind – what do you do, sir?”
― John Maynard Keynes
However, my favorite Keynes quote is the following:
“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
― John Maynard Keynes
Wait a minute. I thought everyone was getting “huge” raises back in 2021 & 2022. Must have been another media-created mirage, like that ‘trucker shortage’.
Back in 1984, single earner households were more common. So how much of this income increase since 1984 is due to more earners per household?
And he nails it! Yup, two-wage households, and screwed up kids because mom’s at work when they’re awake. It’s the downside of liberated women.
Real income up in’23? Well in that case, I’m changing my mind and voting for Kamala Harris. I’m also changing my mind on Ukraine: Ukraine CAN defeat Russia. just like Danny DeVito can win gold in the Olympic high jump, if only he sets his mind to it. I’m sure cat is perfectly tasty with some Cajun spice. I’ll bone up on my Haitian Creole.
What the government says must be true. Let me check my wallet again.
Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse.
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The issue is derivatives deregulation. Prices of commodities would have crashed if derivatives were regulated as they were prior to the deregulation in 1999 and then 2001. We have this whole fake economy because money is frontrunning on commodity prices and causing the real economy to suffer. That has been the story since 2001 in housing and anything that uses commodities (basically everything). We will never get back to a productive economy until the commodity complex is killed. We will just end up with more people in pain and unable to afford to live. We have created this mess but it can be fixed. Don’t let any banker or financial person or commodity trader tell you differently.
Derivatives are simply a commercial contract between (hopefully) sophisticated parties … no need to regulate.
What needs to happen is STOP BACKSTOPPING and bailing out Wall Street and the Dumb-Greedy Corporations (aka LTCM in 1999; AIG in 2008; SVB in 2023) … market discipline will moderate the risks.
Unraveling derivative contracts will prove to be a bear when SHTF
Agree on SHTF. Need a small iceberg (SVB?) to instill fear in markets.
Above examples (LTCM, AIG, SVB) had cash … haircut may have been 10% on pledged collateral if liquidation was quick.
Even the Feds could backstop at 90% (not 100% as done on SVB). Yes, run would occur until Buffet and other smart buyers (Mish readers) stepped in.
Derivatives are a long piece of rope tied into knots. It won’t unravel–it simply snaps at the knots.
One of the causes of the so-called GFC was rehypothecation, lack of trusted collateral, and speculation on contracts between so-called sophisticated buyers and sellers on interest rates, currencies, commodities, etc.
Derivative contracts are synthetic bets on the real and financial economy that exist because of the casino capitalism marketplace. They still are not adequately regulated and as the hypocrite Warren Buffett argued they are weapons of mass destruction while he also practiced making derivative bets.
I beg to differ, Rehypothecation was a method. The cause was miss-pricing risk, both in the collateral and the derived instruments. A financial virus, you might say. We have the same problem now, still enabling speculation without the offsetting downside.
How can using collateral already loaned out once then loaned out again to another buyer of that same collateral at least one more time in a credit world lacking in trustworthy collateral, not exacerbate the already tightening of lending standards?
Please re-read my first response. I mentioned speculation, lack of trusted collateral, and rehypothecation as one of the causes. There were other causes such as fraud, central bank tightening going into a recession, too much leverage, lack of regulatory oversight, etc.
It was not a financial (bank and creditor) crises or financial virus. It was a worldwide monetary crises caused mostly by lack of regulation in world markets, lack of regulatory oversight in in the US, Japan and the Eurozone, rampant fraud and some of the worst central banking policy the world has seen, yet Bernanke receives the Nobel Prize in economics.
Great article.
I would add. It aint what you make, it’s what you keep…………..and no matter how you try, we are keeping less and less
Internal Revenue Service: “We’ve got what it takes … to take what you’ve got.”
See Table B.5 of the report. It is post-tax/post-transfer payment real income. I didn’t see major differences…mostly, incomes are now back to 2019. However, CPI is under-state for most people so most still “feel” poorer.
This report is 6 days old … surprising MSM hasn’t touted it. Thanks to Mish for link.
Apple iPhone 16 sales weaker and sluggish, -12.7%, the recession may finally be getting here.
A little better camera, that will be 1400 sucka
But is has AI and Brawndo built in.
iPhone sales are down almost 2 billion dollars through Q3. The recession is already here – at least for Apple. Most don’t notice as Apple is busy buying back shares and increasing dividends instead of investing in breakthrough products.
What a terrible period for average Americans.
One of the worst 4 year periods on record. I wonder why that is
While I believe Bidenomics and the Harris promised extension of it was horrible for everyone … I sometimes wonder about the 20 year picture as well. In the middle ages (1980s) when I got out of school … even though mortgage rates were between 10 and 20% … if you could do a decent down payment … most folks (sometimes with 2 incomes) could get a house. Sure, sometimes it was dumpy 2/1 that needed some serious TLC, but it was doable. Today I’m not sure that is the case anymore. On the other hand, I see people who can’t afford it … always having the latest iPhone, and cell, TV, and internet plans that regularly top out over $300/month. So I believe this generation is at a disadvantage … and then many disadvantage themselves even more. I wish I had answers and not just observations.
You DO have an answer! And it was a good one.
The answer is that none of us can control what is happening around us; 20% interest rates or 2% rates. But we can work our asses off and make a good life for ourselves no matter what the circumstances are.
I have known an incredible number of very successful people who survived recession, depression, wars, internment, concentration camps, illnesses, etc.
You know what these successful folks all had in common? Determination. Optimism. A positive attitude. And one hell of a work ethic.
You know what they never ever did?
Complain and whine. Like so many of the folks who comment here.
What if the govt were to come seize all the (monetary) profits you worked hard to earn. You wouldn’t complain? The reason some people complain here is that, to them, things look like they might be slowly going in that direction and they’re trying to warn others about it. The reason I say monetary is I believe, as stated in scripture, that what people earn in terms of their faith can never be taken.
I have grown children with Homes and children, and see all of this all the time! I also have many other young adults in my life in Family from Siblings, with Homes and some with children as well.
I don’t look at it as “People Can’t Afford it, but rather they don’t choose to afford it! From my examples the successful ones with homes may drive older vehicles and not real nice ones, but dependable and affordable. The ones with the New Car, Latest Cell Phones, and 200 channels to watch, Rent or Live at someone else’s home.
People eat out all the time, buy the latest “must have” gadgets and new clothes and new looks (hair, tattoos, piercings etc.) all the time. It’s all about one’s “Personal Priorities” which is why it pains me to listen to this crowd, that just wants and expects it ALL!!!
The only disadvantage I can see mostly, is “a self inflicted” disadvantage…