Unexpectedly Intriguing!
February 1, 2018

Median household income in the U.S. rose to an estimated $58,829 in December 2017, an increase of 0.15% from our November 2017 estimate of $58,741. The following chart shows our estimates for the trends for both nominal (red) and inflation-adjusted median household income (blue) from January 2000 through December 2017.

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

In nominal terms, which provide perhaps the best indication of the state of the U.S. economy for typical American households, we find that the pace of growth of median household income has turned up in the period from September through December 2017, after having been in a decelerating trend since mid-2014.

After adjusting the monthly nominal household income estimates for inflation, so that they are expressed in terms of constant December 2017 U.S. dollars, we also find an uptick in so-called "real" median household income in recent months, which has come after this measure dipped sharply from July to September 2017. This period coincides with the impact of Hurricane Harvey and Hurricane Irma, which caused a short term spike in the prices of consumer goods and construction materials in Texas, Florida and in other states along the gulf coast, which has since largely dissipated.

These recent trends are easier to see in the following chart, where we have presented the year over year growth rate of median household income in the U.S. in the period from January 2001 through December 2017.

Median Household Income in the 21st Century: Nominal and Real Year Over Year Growth Rates, January 2001 to December 2017

The methodology for the approach we've developed to generate these median household income 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, so that they are expressed in terms of the U.S. dollars for the month for which we're reporting the newest income data.

Analyst's Notes

We've incorporated our first major data revision in this month, where the U.S. Census Bureau has revised its population estimates for each month going back to April 2010. Meanwhile, the U.S. Bureau of Economic Analysis' personal income estimates have yet to see significant revisions, which for the data published on 29 January 2017, only involves very minor changes in the data published in the last three months.

Using our previous November 2017 estimate of $58,741 as a reference, which was based on pre-population revision figures, we would now estimate nominal median household income for that month to be $77 lower, or $58,664, where our estimate for December 2017's nominal median household income of $58,829 represents a 0.3% increase from this revised figure. In our charts above, we have fully incorporated the effects of the population data revision for all months in our analysis according to the methodology that we've previously established, where our revised estimates fall within 0.13% of their previously indicated values, and where this largest percentage change applies for the month of November 2017.

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 January 2018. Accessed: 29 January 2018.

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 January 2018. Accessed: 29 January 2018.

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: 12 January 2018. Accessed: 12 January 2018.

Political Calculations. Median Household Income Monthly Estimations. [Excel Spreadsheet]. Last Updated 31 January 2018.

References

Sentier Research. Household Income Trends: January 2000 through May 2017. [Excel Spreadsheet with Nominal Median Household Incomes for January 2000 through January 2013 courtesy of Doug Short]. [PDF Document]. Accessed 22 June 2017. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars to develop the analysis presented in this series.]

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