from Sentier Research
New data from the monthly Current Population Survey (CPS) indicate that median annual household income in November 2019 was $66,043, which is $599 (or 0.9 percent) lower than October 2019 ($66,642).
The median is now 6.2 percent higher than the median of $62,166 in January 2000, the beginning of this statistical series.
The November 2019 median is 1.9 percent higher than that for November 2018 ($64,836).
Median household income in November was 7.5 percent higher than the median of $61,436 for December 2007, the official start of the “great recession” and 17.5 percent above the post-recession low point of $56,185 that was not reached until June 2011, two years after the recession had officially ended.
Median annual household income has displayed a somewhat erratic pattern 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 June 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. (See Figure 1)
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The general upward trend in median annual household income since June 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 about 0.3 percent between October 2019 and November 2019, which is comparable to the 0.3 percent increase between September 2019 and October 2019. The uptick in inflation during the past two months had a negative effect on real median annual household income.
According to Gordon Green of Sentier Research,
Real median household income has continued to display an upward trend over the past 12 months (up 1.9 percent), and especially since the low point reached in June 2011 (up 17.5 percent). We continue to monitor the course of inflation, as this has a significant effect on the trend in real median annual household income. The relatively large increase in inflation last month (0.3 percent), following a comparable increase the month before, had a negative effect on real median annual household income. We are at a point now where real median household income is 6.2 percent higher than January 2000, the beginning of this statistical series. We have seen a strong positive trend in real median annual household income over the past several years, which is encouraging, but the course of inflation over the coming months and years will be critical.
Additional Highlights
The November reading on the labor market from the U.S. Bureau of Labor Statistics is not significantly different than October:
- The official unemployment rate was 3.5 percent in November 2019 compared to 3.6 percent in October 2019.
- The median duration of unemployment was 9.4 weeks in November 2019 compared to 9.3 weeks in October 2019.
- 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 6.9 percent in November 2019 compared to 7.0 percent in October 2019.
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 106.2 in November 2019, higher than December 2007 (98.8) when the “great recession” began, and higher than June 2009 (97.0), when the “economic recovery” subsequently began.
- The Sentier HII was 90.4 in June 2011, the low point in our household income series.
Copies of the report, Household Income Trends: November 2019 (9 pages as .pdf), issued in December 2019, can be obtained from the Sentier Research, LLC website at www.sentierresearch.com.
The authors of the new report are Gordon Green and John Coder, both former officials at the U.S. Census Bureau. All media inquiries should be addressed to Gordon Green at the email address [email protected], or by telephone on (703) 764-0249.
Notes:
Income amounts in this report are before-tax money income and have been adjusted for inflation; income amounts are expressed in October 2019 dollars and 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 almost 50,000 households and approximately 96,000 adult 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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