Personal Income Depression

October 11th, 2011
in econ_news

depressed-man Econintersect:  Real U.S. personal incomes have fallen by 9.8% since the beginning of The Great Recession in December, 2007, according to an article in The New York Times.  The data quoted is through June, 2011.  What is astounding about this is that the decline in inflation adjusted household income since the recession officially ended by the NBER (National Bureau of Economic Research) is more than double the decline during the official recession.  The official declarations by the NBER (National Bureau of Economic Research) place the recession from December, 2007 through June 2009 (19 months) and the post-recession period is slightly longer (24 months).   Annualized, incomes declined at a rate of 2.0% a year during the recession and 3.4% a year since it ended.

Follow up:

Incomes have actually been declining in an irregular pattern for ten years. The following graph is from The NY Times:


There was a rally in real median household income for 31 months between late 2005 and early 2008.  Otherwise the (nearly) ten-year trend has been relentlessly down, and more steeply during The Great Recession and in the “recovery” period following.  The rate of decline from February, 2002 to September 2005 (43 months) was 1.6% a year.  The rate of increase for the 31 months preceding the February 2008 peak was 2.2% a year.

For the entire time period from February, 2002 to June 2011 (112 months) the rate of real household income decline has been 1.2% a year.  Separating out the 2005-2008 advance, the remaining 81 months declined at an average rate of 2.9% a year.  The following graph summarizes the data:


The numbers in the above graph differ from the numbers quoted from the NY Times article because the Econintersect graph uses the peak in February 2008 as a marker and the Times uses the start of the recession in December 2007.

Source:   The New York Times

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