Unexpectedly Intriguing!
02 March 2021

Political Calculations' initial estimate of median household income in January 2021 is $66,039, an decrease of $241 (or 0.4%) below the initial estimate of $66,280 for December 2020. This is the first month-over-month decline for median household income in the U.S. since the coronavirus recession bottomed in August 2020.

The latest update to the chart tracking Median Household Income in the 21st Century shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through January 2021. The inflation-adjusted figures are presented in terms of constant January 2021 U.S. dollars.

Median Household Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to January 2021

The cause of the decline after months of recovery can be found in the renewed lockdown measures imposed by several state and local governments in late November or early December 2020, such as in California, Illinois, New Jersey, New York, and Pennsylvania, to identify the lockdown states with the largest populations. The data for December 2020 had indicated the rebound in median household income was slowing. The data for January 2021 confirms their negative impact.

Analyst's Notes

The BEA issued minor downward revisions of the received aggregate wage and salary dispersement data we utilize in generating our estimates of median household income for the period covering July 2020 through December 2020.

As promised earlier this year, we're rolling out a new near-real time economic indicator based on average individual earned income (income earned only from wages and salaries). Here's a sneak preview of what it looks like!

Average Individual Earned Income in the 21st Century: Nominal and Real Modeled Estimates, January 2000 to January 2021

At first glance, average individual earned income per capita looks to be both more sensitive to changes in trends and more volatile than median household income. It's also easier and more direct to calculate. We'll discuss it at greater length after we've taken it for an extended test drive behind the scenes.

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 before ceasing to operate in early 2020, as its principals have retired. In their absence, we are providing the estimates from our alternate methodology for estimating median household income on a monthly basis. 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: 10 February 2021. Accessed: 13 January 2021.

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: 26 February 2021. Accessed: 26 February 2021.

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: 26 February 2021. Accessed: 26 February 2021.

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