Unexpectedly Intriguing!
August 5, 2020

Political Calculations' initial estimate of median household income in June 2020 is $65,778, down 0.3% from May 2020's revised estimate of $65,947.

The change reflects the continuing downturn in wage and salary income that is a direct consequence of business closure and stay-at-home orders imposed by state and local governments in response to the outbreak of the coronavirus pandemic in the U.S. in late March 2020. These lockdown orders resulted in large scale job losses, particularly in low wage earning occupations, as they effectively threw the U.S. economy into recession. Although these lockdown orders began being lifted in mid-May 2020 in many states, the data indicates their downward momentum continued in June 2020.

The following chart shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through June 2020. The inflation-adjusted figures are presented in terms of constant June 2020 U.S. dollars.

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to June 2020

Median household income in the U.S. has declined by 1.3% through June 2020 from the revised $66,643 recorded in February 2020, the last month of expansion for the U.S. economy identified by the National Bureau of Economic Research, which marks the onset of the coronavirus recession.

Looking at the year-over-year rate of change for median household income, the following chart confirms the nominal trend has nosed over and has continued sharply decelerating at the fastest rate recorded to date in the 21st century.

Median Household Income in the 21st Century: Year Over Year Growth Rate, January 2001 to June 2020

With the lifting of the lockdown orders, we anticipate the downward trend for median household income in the United States will decelerate as economic activity increases, though the delayed first wave of coronavirus infections affecting many states that had largely escaped the earlier first wave that primarily affected the northeastern portion of the nation will put a damper on that recovery.

Analyst's Notes

The aggregate personal wage and salary income we use to generate our estimates of median household income underwent a significant revision in this past month. The revision affected all data extending back to January 2015. We have updated and revised our underlying analysis accordingly, although we find very little overall change.

As a point of reference, the peak value for nominal median household income in February 2020 has been revised upward to $66,646, an increase of 0.03% from the $66,627 we had previously estimated last month.

Meanwhile, we had initally estimated a median household income in May 2020 of $65,669, 0.4% below the revised estimate for the month of $65,947. The revised data since February 2020 indicates median household income has fallen at a slower rate than the pre-revision data had suggested.

Other Analyst's Notes

Sentier Research suspended reporting its monthly Current Population Survey-based estimates of median household income, concluding their series with data for December 2019. In its absence, we are providing the estimates from our alternate methodology. Our data sources are presented in the following section.

References

Sentier Research. Household Income Trends: January 2000 through December 2019. [Excel Spreadsheet with Nominal Median Household Incomes for January 2000 through January 2013 courtesy of Doug Short]. [PDF Document]. Accessed 6 February 2020. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars.]

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: 14 July 2020. Accessed: 14 July 2020.

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 July 2020. Accessed: 31 July 2020.

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 July 2020. Accessed: 31 July 2020.

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