Unexpectedly Intriguing!
04 August 2021

Political Calculations' initial estimate of median household income in June 2021 is $69,178, an increase of $652 (or 0.95%) from the initial estimate of $68,526 for May 2021.

The latest update to Political Calculations' 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 June 2021. The inflation-adjusted figures are presented in terms of constant June 2021 U.S. dollars.

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

As with each month since January 2021, increases in median household income continue to be accompanied with rapidly rising inflation. In June 2021, inflation slightly outpaced the nominal increase in income, with a slight loss in the purchasing power of the typical American household.

That purchasing power reached its highest point in April 2020, coinciding with the bottom of the coronavirus recession in the United States. It went on to dip before beginning to recover to reach its last peak in December 2020, following the general trajectory of the recovery in nominal incomes. Since December 2020, inflation has eaten away at the purchasing power of the typical American household despite rapidly rising nominal incomes.

Analyst's Notes

The BEA released a significant revision to its historic estimates for aggregate wage and salary data. While data before June 2019 was subject to very small adjustments of less than a tenth of a percent, data from that point onward was subject to significant upward adjustments. Beginning with a 0% change for May 2019's estimate, adjustments grew each month to peak at a +0.9% revision in March 2020, after which, the upward adjustment for each month through December 2020 was relatively flat, ranging between +0.7% and +0.9%.

Data in 2021 however is a different story. The revisions in the current year were characterized by increasingly larger downward adjustments since January 2021, growing to reach a -0.9% revision for May 2021, which represents the largest downward adjustment from the BEA's previous estimates.

We've also updated the chart to indicate the end of the coronavirus recession in April 2020, per the National Bureau of Economic Research's official determination, which was announced since our last update.

References

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: 30 July 2021. Accessed: 30 July 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: 30 July 2021. Accessed: 30 July 2021.

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: 13 July 2021. Accessed: 13 July 2021.

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