Unexpectedly Intriguing!
September 1, 2020

Political Calculations' initial estimate of median household income in July 2020 is $65,672, a decrease of 0.2% from June 2020's initial estimate of $65,778.

The change reflects a continuation of the downturn in wage and salary income that resulted from the combined economic effects of the coronavirus pandemic in the U.S. and the response of state and local governments to it, which continued to drag into July 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 July 2020. The inflation-adjusted figures are presented in terms of constant July 2020 U.S. dollars.

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

Median household income in the U.S. has declined by 1.5% through July 2020 from a slightly revised figure of $66,639 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.

The year-over-year rate of change for median household income confirms the sharp deceleration in this measure in both nominal and inflation-adjusted terms. Both measures are falling at the fastest pace observed to date in the 21st century.

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

The good news in this month's data is that the downward trend for median household income in the United States has begun to decelerate as economic activity increases, as expected. Which is to say median household income in the U.S. is falling at a slower pace, which is a precursor event to its bottoming and beginning to recover.

Optimistically, the bottom for median household income may occur as early as August 2020, though it may take several months to verify that projection.

Analyst's Notes

In August 2020, minor revisions were made to the aggregate personal wage and salary income data we use to generate our estimates of median household income, which affects estimates from January 2020 through June 2020.

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: 12 August 2020. Accessed: 12 August 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: 28 August 2020. Accessed: 28 August 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: 28 August 2020. Accessed: 28 August 2020.

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