Household Incomes Declined During Recovery
By David Henderson
My guess is that many readers have already seen the articles and blog posts about the study of household incomes done by a firm named Sentier Research. Here’s a sample post. The study shows that real median household income declined more during the current recovery than it did during the recent recession. Incomes falling during economic recoveries is pretty unusual. The numbers are shocking and I wondered if the authors were members of some fringe group looking to go after Obama.
They don’t appear to be.
First, the data. I’ll quote from the study, which you can find here. (Note, though, that Sentier is charging $25 for it.) This is from the introduction:
Based on new estimates derived from the monthly Current Population Survey (CPS), real median annual household income, while recovering somewhat during late 2011 and the first half of 2012, has fallen by 4.8 percent since the “economic recovery” began in June 2009. Adding this post-recession decline to the 2.6-percent drop that occurred during the recession leaves median annual household income 7.2 percent below the December 2007 level.
After adjusting for changes in consumer prices, median annual household income declined during the recession, from $54,916 in December 2007 to $53,508 in June 2009. During the “economic recovery”, as the unemployment rate and the duration of unemployment remained high, real median annual household income continued to trend lower, standing at $50,964 in June 2012.
As I have noted many times on this blog, the Consumer Price Index (CPI) overstates inflation and so the declines aren’t quite as bad as they look. But even if the overstatement is one percentage point per year, these are still declines.
Now to the authors’ bona fides. The authors are Gordon Green and John Coder. Here are excerpts from their bios:
Gordon Green is a former Chief of the Governments Division at the U.S. Census Bureau and a member of the Senior Executive Service (SES). For many years at the U.S. Census Bureau, he directed work on the Nation’s official income and poverty statistics program. He received a Ph.D. in economics from The George Washington University in 1984.
John Coder is a former Chief of the Income Statistics Branch at the U.S. Census Bureau. While at the Census Bureau he directed collection and processing of income and related data collected in the March Current Population Survey (CPS) and was instrumental in developing new methods for imputing missing survey responses.
UPDATE: Check out how White House press secretary Jay Carney flails in trying to answer Jake Tapper’s question about the decline during the recovery.