Let’s see, the federal government and its central bank have never been more involved in various ways with the economy than during this still-young century, and real incomes are lower now than they were at the beginning of the century. Coincidence? From Wolf Richter at wolfstreet.com:
In turn, households get the feel-good illusion.
Despite all the frothy excitement about the stock market’s new highs, and the drooling today over the new highs reached by Housing Bubble 2, exceeding the prior crazy highs of Housing Bubble 1 even according to the Case-Shiller Index, and despite eight years of super-low interest rates, and a million other things that are hyped constantly, median household incomes, the crux of the real economy, is still a dreary affair.
Sentier Research released its median household income measure for October today. Adjusted for inflation, it edged up 0.6% from a year ago to $57,929. But it’s down 1.3% from January 2008, and it’s down 1.5% from its peak in 2002.
It has fallen 0.5% since January. That’s not a propitious trend. The report put it this way: “Median annual household income in 2016 has not been able to maintain the momentum that it achieved during 2015.”
This chart by Doug Short at Advisor Perspectives shows the stagnating inflation-adjusted debacle (blue line) and the nominal income (red line):
The Census Bureau publishes household income data annually in mid-September for the previous year (the 2015 annual data was published in September 2016). Sentier Research uses Census data and publishes monthly updates, adjusted for inflation via the Consumer Price Index (CPI).
And inflation is now rising. The Fed is turning victory laps. Inflation is in part responsible for the decline in real median household income since January. Inflation matters. The report:
We continue to monitor the course of inflation, as this has a significant effect on the trend in real median annual household income.
To continue reading: OK, I get it: Companies Clamor for Cheap Labor, Fed Delivers
