New Household Income Index

All of a sudden, everyone is paying attention to household income trends. It all started with the release of the 2010 income statistics from the Current Population Survey, which revealed steep declines in the incomes of householders under age 55. Then the 2010 American Community Survey results were released, which confirmed those findings. Now a new income series is being introduced by Sentier Research (a venture run by former Census Bureau officials), which will track household income trends on a monthly basis. This is a welcome addition to the woefully inadequate macroeconomic statistics on which most business forecasters depend.

Sentier has developed a Household Income Index to track monthly changes in real median household income, based on data from the Current Population Survey. The starting point for the index is January 2000, with median household income in that month set at 100.0.  In June 2011, the index value stood at a much lower 89.4.

Sentier reports that median household income has fallen more during the "recovery" than it did during the Great Recession itself. From December 2007 to June 2009, median household income fell 3.2 percent, after adjusting for inflation. Since then, it has fallen by an additional 6.7 percent (to $49,909 in June 2011). Overall, median household income has fallen 9.8 percent since December 2007, after adjusting for inflation--a significant reduction in the American standard of living, says Sentier researchers. While some groups have been hurt more than others, almost everyone has taken a hit. Householders aged 65 or older are the only ones who have remained relatively unscathed.

Source: Sentier Research, Household Income Trends During the Recession and Economic Recovery ($20)