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posted on 30 March 2017

February 2017 Median Household Income Up 1%

from Sentier Research

According to new data derived from the monthly Current Population Survey (CPS), median annual household income in February 2017 was $58,714, $588 or about 1.0 percent higher than the January 2017 median of $58,126.

Median household income at the beginning of the great recession in December 2007 was $58,226, so we have now surpassed that level. The Sentier Household Income Index (HII) for February 2017 was 99.7, significantly higher than the January reading of 98.7 (January 2000 = 100). The level of real median annual household income in January 2000 was $58,918, which marks the beginning of this statistical series.

The monthly pattern for median annual household income has been marked by some sharp increases and decreases over the past several years. More broadly, there has been a general upward trend in median household income since the post-recession low point reached in August 2011. This upward trend was initially marked by monthly movements, both up and down. Many monthly changes were not statistically significant. By the summer of 2014 however, that uneven trend became dominated by a series of significant monthly increases. However, with the exception of some minor ups and downs, median annual household income has essentially been flat over the past year. (See Figure 1.)

Median annual household income in February 2017 ($58,714) was not significantly different than February 2016 ($58,619), but was 10.1 percent higher than in August 2011 ($53,330). This general upward trend since August 2011 reflects, in part, the low level of inflation as measured by the CPI for all items used in this series, as opposed to the CPI less food and energy. Energy prices have recently been fluctuating, which has had an effect on the CPI for all items. The CPI for all items increased by only 0.1 percent

[click on image to enlarge]

/images/z%20SentierResearch.png

According to Gordon Green of Sentier Research:

The 1.0 percent increase in median household income in February 2017 to $58,714 brings us to the point where real median household income over the past year was essentially flat (the February 2016 median was $58,619). We continue to monitor the course of inflation, as this has a significant effect on the trend in real median annual household income. It is encouraging that the CPI for all items increased by only 0.1 percent between January 2017 and February 2017, compared to an increase of 0.6 percent between December 2016 and January 2017. We are now at a point now where real median household income is 0.8 percent higher than at the beginning of the great recession in December 2007, and closing in on the level of $58,918 January 2000, the beginning of this statistical series.

The February reading on the labor market from the U.S. Bureau of Labor Statistics shows a slight improvement compared to January:

  • The official unemployment rate in February 2017 was 4.7 percent, not significantly different than the January 2017 rate (4.8 percent).
  • The median duration of unemployment was 10.0 weeks in February 2017, slightly lower than January 2017 (10.2 weeks).
  • The broader measure of employment hardship, which includes the unemployed, marginally attached workers (of which discouraged workers are a subset), and persons working part-time for economic reasons, was 9.2 percent in February 2017, slightly lower than the January 2017 reading (9.4 percent).

Real median annual household income in February 2017 can be put into broader perspective by comparisons with previous levels of household income since the last recession began and dating back to the start of the last decade:

  • The February 2017 median income of $58,714 is 2.7 percent higher than the median of $57,160 in June 2009, the end of the recent recession and beginning of the "economic recovery."
  • The February 2017 median is 0.8 percent higher than the median of $58,226 in December 2007, the beginning month of the recession that occurred more than nine years ago.
  • And the February 2017 median income is now drawing closer to the median of $58,918 in January 2000, the beginning of this statistical series.

The Sentier Household Income Index (HII) shows the value of real median annual household income in any given month as a percent of the base value at the beginning of the last decade (January 2000 = 100.0 percent):

  • The Sentier HII stood at 99.7 in February 2017, higher than December 2007 (98.8) when the "great recession" began, and even higher than June 2009 (97.0), when the "economic recovery" subsequently began.
  • The Sentier HII was 90.5 in August 2011, the low point in our household income series, compared to 99.7 in February 2017.

Notes:

Income amounts in this report are before-tax money income and have been adjusted for inflation; income amounts have been seasonally adjusted, unless otherwise noted.

The estimates in this report are based on the Current Population Survey (CPS), the monthly household survey that provides official estimates of the unemployment rate. The CPS samples approximately 50,000 households and 135,000 household members each month. As is the case with all surveys, the estimates are subject to sampling and nonsampling errors. All comparisons made in the report have been tested and found to be statistically significant at the 90-percent confidence level, unless otherwise noted.

Household income is defined as the sum of the incomes of all household members. Income refers to all sources of money income including earnings from work, Social Security, interest, dividends, cash welfare, retirement pensions, unemployment compensation, veterans' benefits, etc. Income excludes capital gains and losses, and lump-sum, one-time amounts. Household income is measured before the payment of federal and state income taxes and Social Security payroll taxes.


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