Once upon a time American incomes grew a reliable 2 or 3 percent a year and inflation was low to nonexistent. The Federal Reserve changed all that. From David Stockman at lewrockwell.com:
There should be no doubt that the UniParty has left main street households high and dry. During the past five years inflation-adjusted weekly earnings have barely limped forward at a 0.4% annual rate.
Self-evidently, the Fed’s pro-inflation policy has backfired. Rather than functioning as a stimulant to growth, it has ended up devouring nearly all of the modest nominal wage gains that have been realized by private sector workers in America.
Index of Inflation-Adjusted Average Weekly Earnings, January 2019 to January 2024
Needless to say, this has been far from the case historically. In fact, real median family income grew at a robust 3.54% per annum between 1954 and 1969. But shortly thereafter, the Fed’s shackles were removed with respect to gold convertibility in August 1971, and it was off to the inflationary races from there.
During the next 53 years, family incomes barely won the footrace against the waves of inflation generated by the nation’s central bank. Real median family income rose by only 0.74% per annum between 1969 and 2022 or by just 21% of the 1954-1969 average.
