The Census Department notes that real (inflation-adjusted) median household income is down for three consecutive years. 
The data is very lagging, but please consider the Census Department Income, Poverty and Health Insurance Coverage in the United States: 2022, released on Tuesday.
Real median household income fell by 2.3% from $76,330 in 2021 to $74,580 in 2022. Income estimates are expressed in real or 2022 dollars to reflect changes in the cost of living. Between 2021 and 2022, inflation rose 7.8%; this is the largest annual increase in the cost-of-living adjustment since 1981.
The real median earnings of all workers (including part-time and full-time workers) decreased 2.2% between 2021 and 2022, while median earnings of those who worked full-time, year-round decreased 1.3%
When real median household income is negative multiple years, the economy is in recession or headed for one.
Real Incomes Down Third Year
Real incomes are down for the third consecutive year as noted by the above chart from Bloomberg.
The report paints a concerning picture of the financial health of American families halfway through Joe Biden’s presidency. Even as the economy remains strong by many measures and inflation has cooled significantly from last year’s peak, it’s still proven a to be a political roadblock as Biden seeks a second term.
The figures also help explain why Americans have felt like they’re in a recession, even as the economy bounced back quickly from the initial Covid downturn. Hourly earnings have only just started to outpace inflation in recent months after lagging for two years, and measures of consumer sentiment remain well below pre-pandemic levels.
Real Median Household Income by Race
Non-Hispanic whites were hit the hardest.
Median Earnings by Sex
Men were hit much harder than women. The median male is making no more today than than 1973.
All of the household wage gains (not much) for nearly 50 years come from females.
Women still lag men in earnings, but unless we see a comparison by job it’s impossible to make valid judgments on the true state of affairs.
Census Exposes Bidenomics
The Wall Street Journal comments The Census Exposes Bidenomics
You almost have to admire the brass of the Biden White House. The Census Bureau reported Tuesday that Americans are poorer under Bidenomics, and the President quickly changed the subject to blame Republicans for rising child poverty on his watch. As usual, too many in the press corps bought the spin.
Mr. Biden is trying to avoid the real story, which is that the Census Bureau says median household income adjusted for inflation fell last year by $1,750 to $74,580. It is down $3,670 from 2019. Households in the fourth income quintile—those making $94,000 to $153,000—lost $4,600 in 2022 and $6,700 since 2019. Middle-class Americans who think they’re losing ground are right.
Democrats passed their $1.9 trillion Covid bill in March 2021 with the goal of hooking the middle class on bigger government. But the big political surprise is that Americans weren’t thrilled with the handouts. A Hill-HarrisX poll in July 2021 found that 60% of voters, including nearly half of Democrats, thought the child tax credit expansion was too expensive and no longer needed.
Yet there Mr. Biden was on Tuesday lashing Republicans in Congress for not extending the expanded the child tax credit.
Mr. Biden has apparently forgotten that Republicans didn’t control either branch of Congress in 2021 or 2022. West Virginia Democrat Joe Manchin blocked an extension of the expanded child tax credit because it was estimated to cost $1.2 trillion over a decade.
The annual census data tell the real story of Bidenomics: A gusher of unprecedented and unnecessary social-welfare spending helped to produce the highest inflation in 40 years that has made Americans poorer. The last thing Congress should do is heed Mr. Biden’s demand to do it all again.
None of this is surprising to me. Gross Domestic Income numbers have been flashing warning signs for several quarters.
Negative Revision to 2nd Quarter GDP, Huge Discrepancy with GDI Continues
On August 30, I commented Negative Revision to 2nd Quarter GDP, Huge Discrepancy with GDI Continues
GDP vs GDI Chart Notes
- Real means inflation adjusted
- GDP is Gross Domestic Product
- GDI is Gross Domestic Income
- Real Final Sales is the bottom line assessment of GDP. It excludes inventories which net to zero over time.
GDI was negative for two consecutive quarters and has been weaker than GDP for four quarters. GDI is now positive, but it is subject to greater revisions than GDP.
Two Measures of the Same Thing
Bear in mind that GDP and GDI are two measures of the same thing. Income should match products sold.
The last three quarters of GDP are +2.6%, +2.0%, and +2.1%.
The last three quarters of GDI are -3.3%, -1.8%, and +0.5%.
Philadelphia Fed GDPplus Measure Sure Looks Like Recession Started in 2022 Q4
GDPplus is a measure of the quarter-over-quarter rate of growth of real output in continuously compounded annualized percentage points.
It’s a blend, but not an average, of Gross Domestic Product (GDP) and Gross Domestic Income (GDI). It is much smoother than either GDP or GDI as the above chart show.
In 100 percent of the cases, with no false signals, no misses, and no lead times more than two quarters, every time GDPplus had two consecutive quarters of negative growth, the economy was in recession.
And except for one negative print of a mere -0.1 percent, the economy was in or would soon go into recession as soon as the first negative GDPplus number surfaced, and stuck.
For discussion of the advantages of GDPplus, please see Philadelphia Fed GDPplus Measure Sure Looks Like Recession Started in 2022 Q4
People believe what they want and certainly Biden along with mainstream media is touting GDP.
The Census numbers are very lagging but match the idea that GDI is the set or numbers to watch.
Delusions of grandeur.
come on mish. i’d hope you would catch on by now, all this government hooey is to be used to just screw the middlebrows on SS etc…………increases.
you are really grasping at straws. we have raging inflation in purchasing power and i still don’t know one person out of work in the 4 states i have lived and know hundreds. every college kid in my CC class has jobs. these are unschooled 19 year olds. half barely speak english, as they are immigrants. however their english better than mine.
The social security snapshot for August is out. By my math, 97,000 brand spanking new socialists added to the dole. Sadly, it was only an increase of 34,000 active recipients which means that 63,000 people stopped collecting social security which means they died or decided to stop being socialists.
September is the most common birthday so let’s see how those numbers turn out in October.
link to ssa.gov
And 187,000 non farm payroll jobs were added. That’s 5.5 working for every retired socialist.
The activation of monetary savings increases the supply of loan funds, but not the supply of money, a velocity relationship. Bank-held savings transferred through the nonbanks, e.g., MMMFs, increases liquidity. The NBFIs are the DFI’s customers.
Combine that fact with the drawdown in O/N RRPs and you get Atlanta GDPNow’s model estimate for real GDP growth greater than 5%.
It is also probable that the structural change in the composition of the money stock is propelling the economy. And the decline in M2 is being offset by the rise in large time deposits (which are erroneously excluded from the money stock, as loans = deposits).
“Combine that fact with the drawdown in O/N RRPs and you get Atlanta GDPNow’s model estimate for real GDP growth greater than 5%.”
GDP calculation has been altered and gamed by the feds to the point that it is now the acronym for Grossly Distorted Poppycock, IMO. The federal government is driving the figure higher (in addition to the GDP percentage attributable to this) on ever increasing amounts of debt-backed federal spending with no regard to any fiscal sanity whatsoever.
Agreed. It’s a fiscal surge. But also, the distributed lag effect for R-gDp troughed in May. The last time it troughed in 2022, stocks bottomed out.
Men were hit much harder than women. The median male is making no more today than than 1973.
If this statement is true then the unions and other workers are right to strike and demand higher wages. If businesses can’t afford it then what the heck are we all doing this for now? What’s the point of a business that can’t pay livable wages?
The PPI came in hotter than expected today.
The Producer Price Index for final demand increased 0.7 percent in August, seasonally adjusted, after rising 0.4 percent in July, the U.S. Bureau of Labor Statistics reported today. The August advance is the largest increase in final demand prices since moving up 0.9 percent in June 2022. On an unadjusted basis, the index for final demand rose 1.6 percent for the 12 months ended in August.
Unions for private companies are free to strike for whatever amount they feel they deserve. Public unions are another matter and are an abomination that should disappear.
But my question to you is, why do you feel they need to demand higher wages? Are they more productive now than in 1973 and if they are, is it due to skill set increase or automation. If it’s the former, they should be compensated, if it’s the latter it’s hard to see why. Finally, I was 8 years old in 1973 and I recall life being pretty good overall for the average family so if we are all as well off as we were in 1973 that’s a pretty good thing in my mind.
“But my question to you is, why do you feel they need to demand higher wages? ”
The core problem in our society is the debasement of the currency. If you make 100k today it will buy 100k of goods but if you don’t get raises higher than the rate of inflation you will soon find yourself making 150k but only able to buy 50k worth of goods.
So the question is this? Who is responsible for this nonsense? Why do we live this way and for what purpose? And most importantly, what is the solution?
I have said that all wages SHOULD BE indexed to inflation otherwise we are all playing a fools game. Forget productivity, economics, money supply, the Fed, Biden, Trump, and everything else, why are we doing this to ourselves and not demanding change?
Some people think eliminating the Fed is the solution but I have asked when in the last 2000 years was there never an imbalance like this through a variety of systems including monarchies, serfdom(s), democracies, republics and we can never seem to get this right. Are humans incapable of solving this? if so we’re all doomed.
get rummy and cheney to just run the price control board like they did for the commie gerald ford. or get a nit wit like trump or biden to determine every serf’s proper wage.
Technically you should only need raises that match inflation in order to not lose purchasing power (assumes tax brackets also raise to match inflation).
But we both know the truth is that if you are standing still (ie doing same old job year after year) that you are falling behind anyone who is moving forward (increasing skill set).
Personally I think comparing to 1973 is rather silly. In 1973 most families were still single income earners. That’s no longer true in 2023 and hasn’t been since probably the 1990s. So comparisons should really only be going back to 1990 (or whenever the majority of families were dual income). Because if you don’t do that, then it should be obvious why a single income today doesn’t match a single income in 1973 because today that single income is competing with dual income earners when trying to buy homes, cars etc so they have only half the purchasing power.
Auto workers have been under a two-tier wage system since the bankruptcy in 2008. The starting wage for them now is about $17/hour.
Inflation the past few years has created significant problems for all workers at those wage levels.
Mary Barra’s $29 million per year contract makes UAW workers feel unappreciated.
Similar to Bezos, who is worth about $200 billion but pays warehouse workers starting wages of $16.50. Maybe someone worth that much money should share more of the profits with the people that make those profits possible.
Neither Barra nor Bezos would have their wealth without the army of people that man their operations.
The scarcity of workers, in the future will likely result in more labor demands.
Define livable wage. The problem with western society is that most see luxuries as necessities. Plasma screens, Netflix, junk food, eating out, Nike shoes etc are all luxuries. The 1973 wage was livable and if you are getting the equivalent wage now then it is also livable if you accept that in 1973 most people are far less junk food, less dining out and had no costs like Netflix as it didn’t exist.
Let’s start with basic shelter and related rent. Most people on minimum wage or even $15/hr can’t afford a two bedroom apartment anywhere in the US. This has been reported on endlessly the past 18 months.
If you can’t afford rent then we’re already lost far before we get to TVs and Netflix.
You missed the silver lining here. Lower real income means less ability to save for retirement. If they save for retirement, the lackluster markets are not keeping up with inflation … so they actually lose money from their retirement. By not being able to put said money aside, they avoid that secondary loss. True, this isn’t really a good thing, but I’m sure politicians can spin it that way.
Great charts.
Shingle mums caused a divergence between black and white real household income,
but black @52,860 gained a new all time high. While black income is rising since 2019, white, Hispanic and Asian real income are deflating, b/c more women became shingle mums, infected by community organizers.
Trump sent 5K/10K to shingle mums to get votes. Politicians from both sides avoid solving this family cancer.
Toot toot!
Do you have a valid rebuttal or just an infantile comment?
We are likely to be in a real recession but not a nominal (after inflation) one. Price increases also lag cost increases. Business generally waits until profits are pinched and they are forced to raise.
Being a little broad brush here. Small sample being generalized. Nominal revenue numbers for the small businesses I work with jumped over 20% in 2022 and have backed off 5% in 2023. However, profits keep rising. Profits jumped 50% in 2022 and 15% for the last twelve months.
The other piece is productivity. I understand productivity is down with WFH, but technology keeps automating stuff and I don’t think a lot of the output increase is measured well. Machine learning and AI have been grinding away at speeding things up for a decade. EVs are going to follow Moore’s Law for costs and prices. I think we are in a silent productivity boom even with re-shoring to the U.S., but I don’t see data to support this hunch.
And in EVERY single one of those cases, . . .
You had a real housing crash that included a significant increase in foreclosures. When you look at the FRED chart for delinquencies, we’re still below the average over the last 30 years. It’s starting to increase, but it’s only 2.77% as of Q2. It peaked at 6.77% in Q2 of 2009.
RESULT: We are NOT in a recession.
The median new home sales price is down 16% since Oct 2022. But for now, it’s bottomed out and has started to rise again. All this did was temporarily buydown mortgage rates.
RESULT: We are NOT in a recession.
The median existing home sales price dipped 10% from late last summer through January but is now $10K more than when it started to drop.
RESULT: We are NOT in a recession.
Housing ALWAYS leads us into a recession. We are absolutely not in a “typical” housing recession. It may feel like one, but without a significant rise in foreclosures, we’re not there yet.
Local government’s property tax revenue is still broadly up across the US, so there’s tons of extra CAPEX monies being spent on goods & services.
The federal government is going to run a near $2T deficit for 2023. Again, this is ENORMOUS stimulus that’s inducing inflation.
For the bottom 50%, the economy feels like a recession, but on a macro level, we’re not there yet. And, it may take 12 more months to get there. And without a real, sustained decline in housing, it’s arrival will continue to be delayed.
And finally, 1st-time unemployment claims are the CLEAREST indicator of the immediate arrival of a recession. Last week they dipped to 216K, and the FRED graph clearly shows that we have to get up to about 300K before the NBER declares a recession.
RESULT: It’s extremely unlikely a recession arrives this year. Next year seems like a better bet, but I for one won’t be surprised if it takes until 2025.
Families with money in the bank are making trillions of $$$ now with rates being as high as they are. This does a fantastic job of propping up consumer spending, at least for the top 40% or so.
BENW – Are you sure we’re not in recession? Lol.
Thanks for the great comment. We need more real “analysis” like this posted here instead of wishful thinking for a recession or a fed pivot/cut. Its clear too many people get emotionally attached to positions here and don’t look at the data clearly.
The bond king Gundlach thinks recession will hit midyear 2024 so we’ll see what happens.
I think mid 2024 seems about right. At some point, things have to start rolling over. Higher rates will eventually hit companies’ & consumers’ bottom lines enough to increase layoffs and bankruptcies.
As I’ve said MANY, MANY times, my biggest concern isn’t the recession but Congress’ reaction to it.
I fully expect Pocahontas, Bernie, Biden, AOC and their Republican UnitParty friends like Mitt Romney & McConnell to start screaming for rent & mortgage relief.
If this happens, the much-needed classic capitalism concept of letting markets sort out bubbles isn’t going to happen.
Foreclosures will not rise nearly to the level that they should in order to push down housing by 25-30%.
IMHO, housing has entered into a perpetual bubble state.
Cheers!
well stated old sport. also the whole dumb sport of waiting on some governing body to “declare a recession” might be the dumbest sport in world. makes pro wrestling and hot dog eating contests look downright genius level. one man’s recession is another’s boom time. i also prefer the old standard. if my neighbors lose their jobs and homes, it’s a recession. if it is i, then it’s a depression. no where near any ‘recession”. mish is grasping at straws. paper ones at that.
In my medical training I learned that older people do not fall and then break their hip as a result. In truth, it is the other way around. Their hip breaks and then causes them to fall.
Housing is a trailing indicator, and housing will not fall until after the economy breaks it’s hip, not before. It usually happens without warning, and then their is a snap.
Some parts of the economy may be healthy, but the bones of the economy suffer from Osteoporosis. There will be a Giant Snapping Sound. This is not unlike the magnitude of Ross Perot’s prediction of a Giant Sucking Sound after NAFTA.
What a bunch of nonsense.
“Local government’s property tax revenue is still broadly up across the US, so there’s tons of extra CAPEX monies being spent on goods & services.”
Makes no sense.