Econintersect: The official calls from NBER (National Economic Research Bureau) indicate that the economy in the U.S. has had two 21st century recessions: March-November 2001 and December 2007 to June 2009. However, when it comes to personal income the country has been in a depression. There was a dip in the early years of the new century and then a recovery to earlier highs in early 2008 and 2009. Then a much deeper decline in personal income ensued as a consequence of the Great Recession. The graph shown below (click on graph for larger image) tells the story. Graph is from Catherine Rampell, Economix.
Sentier Research LLC has released a report studying household income trends since January 2000. The graph above was constructed fro their data. The decline in real household income over the 13+ years is over 8% and from the two peaks (2002 and 2008), more than 9%. It remains to be seen if the decline from either of the two peaks to the minimum in the summer of 2011 defines the bottom of the decline in household income. If that holds up there will have been recorded a 10.6% decline during this depression.
The length of time that real household income has remained between $51k and $52k (most of the past 24 months) indicates that there may not be a very rapid recovery. Econintersect has found no reasonable means of estimating future income growth but it is not improbable that the 9+ years it took for the decline of more than 10% could well take an equal amount of time to recover. A time of 15-20 years (or more) for a recession and recovery of household income to 2002 levels would indeed be a massive depression for that metric. (See GEI Analysis for definition of depression.)
The graph below from Sentier Research LLC shows both real median household income (HII – Household Income Index) and the U-6 unemployment rate since the turn of the century.
Click on graph for larger image.
Sources:
- Household Income Trends: February 2013 (Gordon Green and John Coder, Sentier Research LLC, 25 March 2013)
- Median Household Income Down 7.3% Since Start of Recession (Catherine Rampell, Economix, The New York Times, 28 March 2013)
- Depression: The Forgotten part of the Business Cycle (John Lounsbury, GEI Analysis, 24 October 2010)
