Median Household Income Down 4.8% On Inflation-Adjusted Basis Since June of 2009
Do you feel as though you have less money now compared to June of 2009, despite the fact that the economy has been in "recovery mode" since that date?
According to a new report from Sentier Research LLC, US median household income has fallen 4.8% on an inflation-adjusted basis since June of 2009, which is when the "Great Recession" technically came to an end. So, if you are feeling a bit lighter in the pocket now than you were back then - it's probably because you ARE lighter in the pocket, at least on an inflation-adjusted basis.
As a matter of fact, Sentier Research says that median household income has fallen more during the current "recovery" than it did during the "Great Recession", which lasted from December of 2007 until June of 2009. According to Sentier Research, median household income fell 2.6% during the Great Recession, compared to the 4.8% that it has fallen on an inflation-adjusted basis over the past three years.
Here are a few quotes from one of the principals of Sentier Research, Gordon Green:
"Almost every group is worse off than it was three years ago, and some groups had very large declines in income"
"We're in an unprecedented period of economic stagnation."
The biggest culprit behind the decline in median household income (inflation-adjusted) over the past three years - a national unemployment rate that hasn't dropped below 8% since February of 2009.
According to Sentier Research, there have been small gains in hourly earnings and average hours worked per week over the past three years, but not enough to mitigate the effect of a prolonged period of high unemployment.
While the economy is technically in "recovery mode", try telling that to the millions of people who found themselves out of work or working less hours than they would like. According to the Bureau of Labor Statistics, 5.2 million people in the United States have been unemployed for at least 27 weeks or more. This makes up a staggering 40.7% of all currently unemployed people in the United States (and by "unemployed" I mean unemployed as per the definition of the US government, which doesn't count the millions of people who have given up on finding work or have had to take part-time jobs even though they want full-time employment).
Many households still have at least one head of the household who is currently unemployed or underemployed, so it's not a surprise to hear that median household incomes are actually down on an inflation-adjusted basis over the past three years.
Combine dropping median household income numbers with spiking food and energy prices, and you have the two primary reasons why many households are having such a hard time making ends meet right now.
Source: Sentier Research LLC
Filed under: The Economic Meltdown