Median Household Income Drops 3.6% in 2008
We've had some pretty severe recessions in the United States since the end of WWII - the recession in the early 80s was a particularly nasty one, with the unemployment rate spiking over 10%.
However, according to USA Today, median household income has never dropped as much (in inflation adjusted dollars) as it did in 2008, and things are expected to be even worse this year.
According to the Census Bureau, median household income in the United States fell to $50,303 in 2008, a drop of 3.6%.
This is the biggest drop seen since the government started keeping records of such things in 1947.
Things are projected to get even worse in 2009, with some experts (such as Sheldon Danzinger of the Population Studies Center at the University of Michigan) expecting that household median income will drop as much as 5% in 2009.
Some other data points from the Census Bureau report:
-real median income for families fell 3.3%, while non-family households experienced a drop of 4.0%
-total drop in median income between 1978 and 1983 was 6.0%.. 2007-09 should easily top this mark
-men earned an average of $46,367 in 2008, while women earned $35,745.
-female-to-male earnings ratio was 0.77 in 2008
-poverty rate in 2008 was 13.2%, up from 12.5% the year before
-a total of 39.8 million people were considered to be living in poverty last year
Now, the drop in median household income certainly isn't surprising - afterall, we are currently slogging our way through a nasty recession, and jobless numbers have been spiking over the last year and a half.
However, the severity of the drop in income, especially when compared to the recessions of the early '80s, should certainly raise some eyebrows. With the unemployment rate in the United States expected to top 10% in early 2010, you have to wonder how much income will be down throughout the course of the entire recession.
Any hope that the government had of increased consumer spending helping to lead us out of the recession is looking pretty farfetched at this point.
Not only is household income way down, but there has also been a severe cutback in access to credit for the average American.
Not only can people no longer afford to buy things, but they can't even borrow money to pay for it.
Sources: USA Today - Census: Income fell sharply last year
U.S. Census Bureau
Filed under: The Economic Meltdown