Political Calculations' initial estimate of median household income in August 2023 is $76,201, an increase of $181 (or 0.24%) from the revised estimate of $76,020 in July 2023.
Update 28 October 2023: We made a minor error in reporting our initial estimate of August 2023's median household income estimate. Instead of $76,201, it is $76,216, which we've indicated in boldface type wherever August 2023's estimate is referenced in the rest of this post. The month-over-month change from July 2023 is $196 (+0.26%). There's a bigger error in the chart, as we missed updating "July 2023" in the chart title to "August 2023". The corrected version now appears in this post, the original version can be found here.
After adjusting for inflation, the typical American household lost ground in August 2023. In terms of constant August 2023 U.S. dollars, median household income rounds to $76,352 in July 2023, with August 2023's income estimate coming in 0.2% lower.
These figures are substantially different from what we last reported in the previus edition of our regular median household income series. In between then and now, we've verified median household income has been growing much more slowly in the period since March 2021 than it did during the six prior years thanks to new data released by the U.S. Census Bureau in September 2023. Our previous estimate was based on that previous trend.
The latest update to Political Calculations' chart tracking Median Household Income in the 21st Century shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through August 2023, including the new, more slowing growing trend established in the period since March 2021. The inflation-adjusted figures are presented in terms of constant August 2023 U.S. dollars.
The nominal (non-inflation adjusted) data shows the slower growth of median household income since March 2021, rising from $67,404 (unchanged in our revision) to August 2023's initial estimate of $76,216.
The inflation-adjusted data however indicates U.S. median household income has generally declined since peaking in April 2020 at $79,772 in terms of constant August 2023 U.S. dollars. That decline has only continued in the period since March 2021, falling from that month's inflation-adjusted estimate of $78,130. August 2023's initial estimate of $76,216 is 2.4% below that level and is on a still falling trendline. The answer to the question of why so many Americans are unhappy with the economy of the last few years has an obvious answer.
Analyst's Notes
If verifying the new, more slowly growing trend for non-inflation adjusted median household income using the Census Bureau's latest data wasn't enough, the BEA also executed substantial revisions to the aggregate earned income estimates we use in developing our median household income estimates.
Those revisions affect the period from March 2018 through July 2023. The next chart shows how the aggregate income data changed:
Describing the changes generally, the BEA revised the data for most of 2020 and 2021 upward the data for 2022 substantially downward. Since December 2022, the BEA made significant upward revisions to its estimates for this data series.
For the latest in our coverage of median household income in the United States, follow this link!
If you're curious how we generate our estimates of median household income, we last updated our methodology in September 2023. We also periodically compare our estimates with other nominal estimates, where our updated model reflecting the slower growth of median household income is currently closely tracking the Atlanta Fed's modeled estimates.
References
U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Population. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 31 August 2023. Accessed: 31 August 2023.
U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Compensation of Employees, Received: Wage and Salary Disbursements. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 31 August 2023. Accessed: 31 August 2023.
U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 13 September 2023. Accessed: 13 September 2023.
Image credit: Photo by Emil Kalibradov on Unsplash.
Labels: median household income
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