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October 4, 2017

Median household income in the U.S. rose to ticked upward to $58,419 in August 2017, up slightly from our previous estimate of $58,340 for July 2017. The following chart shows our estimates for the trends for both nominal and inflation-adjusted median household income from January 2000 through August 2017.

Median Household Income in the 21st Century: Nominal and Real Estimates, January 2000 to August 2017

In terms of current U.S. dollars, the most recent trend for median household income in the U.S. has been slowly rising since January 2017. However, after adjusting the nominal income data to be in terms of inflation-adjusted, constant August 2017 U.S. dollars, we can see that since January 2017 has trended flat after having slowly declined from its most recent "real" peak at the beginning of 2016. Our estimates of median household income since January 2000 indicate that this measure of the well-being of the typical American household has not recovered to the peak levels recorded in either late 2000 with the peak of the Dot-Com Bubble or the peak that was reached during the Great Recession that coincided with the failures in the U.S. automotive and financial industries in the last quarter of 2008.

The methodology for the approach we've developed to generate these replacement estimates is described here. In generating inflation-adjusted portion of the Median Household Income in the 21st Century chart above, we've used the Consumer Price Index for All Urban Consumers (CPI-U) to adjust the nominal median household income estimates for inflation.

Notes

Our estimates differ from the recently reported estimates of median household income that were produced for the calendar year of 2016 by the U.S. Census Bureau. We believe that the differences are largely attributable to changes in the questionnaire that the Census Bureau uses to collect income data as part of its Current Population Survey's Annual Social and Economic Supplement (ASEC). The new questionnaire replaced the older survey in March 2015, where the income data compiled by the Census from the redesigned ASEC has consistently indicated higher levels of household median income than what was determined through the previous version of the questionnaire.

Since our estimates are largely based on data that was collected and reported using the previous version of the survey in the preceding 15 years, they are therefore more in line with the Census Bureau's older survey methodology. As more of the post-March 2015 data becomes available, we'll adapt and modify our approach to track it.

Data Sources

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: 29 September 2017. Accessed: 29 September 2017.

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: 29 September 2017. Accessed: 29 September 2017.

U.S. Bureau of Labor Statistics. Consumer Price Index for All Urban Consumers: All Items, Monthly, Not Seasonally Adjusted. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 14 September 2017. Accessed: 29 September 2017.

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