May 2018 marks the first test of our updated model for estimating median household income, where our alternate method indicates that the median income for U.S. households in May 2018 is $61,497.
That figure compares very favorably with the $61,858 estimate of median household income that Sentier Research has reported for May 2018, which was up by 0.6% from Sentier's estimate for April 2018. We had hoped that our estimate would be within one percent ($619) of Sentier's monthly Current Population Survey-based estimate, so we're happy with the result that we obtained with our alternate method for estimating median household income.
The following chart shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through May 2018, as given by Sentier Research's monthly estimates. The inflation-adjusted figures are presented in terms of constant May 2018 U.S. dollars.
Although it's not terribly useful as an indicator of the relative economic health of typical American households, the inflation-adjusted estimates of median household income reveal the median household income estimates for both April and May 2018 have surpassed the previous high for median household income that was set back in January 2008, at the onset of the so-called "Great Recession".
Meanwhile, the year over year growth rate of median household income in recent months remains robust.
Analyst's Notes
While we're presenting Sentier Research's CPS-based monthly median household income estimates in our charts, we're continuing to report the estimates we obtain using the alternate method that we've developed for estimating monthly median household income. We view our alternate estimates as a companion to Sentier Research's methods, much like ADP's monthly payroll estimates augment the Bureau of Labor Statistics monthly employment situation reports.
That said, our alternate method may allow us to do some things that Sentier Research's estimates cannot, namely, to telescope the monthly median household income data back in time, to cover the period before Sentier Research began reporting their data series. That's something that we're looking forward to test driving in the near future!
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. [PDF Document, Online Database (via Federal Reserve Economic Data)]. Last Updated: 29 June 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. [PDF Document, Online Database (via Federal Reserve Economic Data)]. Last Updated: 29 June 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 June 2018.
References
Sentier Research. Household Income Trends: January 2000 through May 2017, March 2018 through May 2018. [Excel Spreadsheet with Nominal Median Household Incomes for January 2000 through January 2013 courtesy of Doug Short]. [PDF Document]. Accessed 27 June 2018. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars to develop the analysis presented in this series.]