If your entire understanding of the economy comes from headlines about the latest economic data, you would be forgiven for thinking these are the best of times. The unemployment rate is down to 5.1 percent, after all!
If your entire understanding of the economy comes from what is going on in financial markets, you would be forgiven for thinking the same. The stock market, its recent dip notwithstanding, is still not far from all-time highs!
That’s what makes the latest annual data on incomes, released by the Census Bureau on Wednesday morning, an important corrective.
The median American household in 2014 had a lower income, in inflation-adjusted terms, than it did in 2013. The $53,657 the household in the middle of the income distribution earned last year was down 1.5 percent from the year before, though the census said that shift was not statistically significant.
But even if that drop is a statistical blip and you assume that middle-class incomes were really flat, flat isn’t anything to celebrate in the current environment. The 2014 real median income number is 6.5 percent below its 2007, pre-crisis level. It is 7.2 percent below the number in 1999.
A middle-income American family, in other words, makes substantially less money in inflation-adjusted terms than it did 15 years ago. And there is no evidence that is reversing. Those families lost ground in 2014. And as we’ve reported previously, the data on wages in 2015 so far does not suggest there is a meaningful acceleration on the way.
Why Americans think the economy sucks
Real dollar incomes have shrunk. Inflation is much higher than the official number. Saving money is actually just throwing it away (near zero interest in a world with effective inflation). The economy is a disaster.