Home Economy Economic Activity Americans’ inflation-adjusted incomes rebounded to pre-pandemic levels last year

Americans’ inflation-adjusted incomes rebounded to pre-pandemic levels last year

By

Associated Press

-

09/10/2024

Economy Income and Poverty — People gather near an electronic display of an American flag in Times Square in New York. The inflation-adjusted median income of U.S. households rebounded last year to roughly its 2019 level, overcoming the biggest price spike in four decades to restore most Americans’ purchasing power. / ASSOCIATED PRESS F ILE PHOTO / PAMELA SMITH

WASHINGTON (AP) – The inflation-adjusted median income of U.S. households rebounded last year to roughly its 2019 level, overcoming the biggest price spike in four decades to restore most Americans’ purchasing power. The proportion of Americans living in poverty also fell slightly last year, to 11.1%, from 11.5% in 2022. But the ratio of women’s

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WASHINGTON (AP) – The inflation-adjusted median income of U.S. households rebounded last year to roughly its 2019 level, overcoming the biggest price spike in four decades to restore most Americans' purchasing power. The proportion of Americans living in poverty also fell slightly last year, to 11.1%, from 11.5% in 2022. But the ratio of women's median earnings to men's widened for the first time in more than two decades as men's income rose more than women's in 2023. The latest data came Tuesday in an annual report from the Census Bureau, which said the median household income, adjusted for inflation, rose 4% to $80,610 in 2023, up from $77,450 in 2022. It was the first increase since 2019, and is essentially unchanged from that year's figure of $81,210, officials said. (The median income figure is the point at which half the population is above and half below and is less distorted by extreme incomes than the average.) "We are back to that pre-COVID peak that we experienced," said Liana Fox, assistant division chief in the Social, Economic and Housing Statistics Division at the Census Bureau. The figures could become a talking point in the presidential campaign if Vice President Kamala Harris were to point to them as evidence that Americans' financial health has largely recovered after inflation peaked at 9.1% in 2022. On Wednesday, economists predict that the government will report that inflation fell from 2.9% in July to 2.6% in August. The Federal Reserve, whose target level for inflation is 2%, is poised to start cutting interest rates next week. Former President Donald Trump might counter that household income grew much faster in his first three years in office than in the first three years of the Biden-Harris administration, though income fell during his administration after the pandemic struck in 2020. The data showed that while the typical American household regained its 2019 purchasing power in 2023, it essentially experienced no rise in living standards over that time. That is a sharp difference from the preceding four years, when inflation-adjusted median incomes rose 14% from 2015 through 2019. The data is based on pre-tax incomes, including Social Security and other benefit programs, though it excludes noncash benefits such as food stamps and Medicaid. The jump in incomes reflects solid job creation last year, which helped reduce the unemployment rate to a half-century low of 3.4% in April 2023. The proportion of Americans in the so-called prime age group of 25-to-54-year-olds with jobs averaged 80.7% last year, the highest level in 23 years. Economists often focus on prime-age workers because they exclude younger people, who are often still in school, and older workers, who are more likely to retire or reduce their hours. By racial groups, median household income rose 5.4% for whites to $84,630, increased 2.8% for Black Americans to $56,490 and was unchanged for Hispanics at $65,540. Asian incomes were also largely unchanged at $112,800. While the overall poverty rate declined from 2022 to 2023, under an alternative measure of income the proportion of children in poverty rose from 12.4% to 13.7%. The bump in child poverty comes two years after it had plunged to just 5.2%, when the pandemic-era expansion of the child tax credit provided enhanced benefits to families. But the credit expired in 2022. "If you want to reduce poverty in the short run, you transfer income to poor families," said Steven Durlauf, an economist at the University of Chicago. Census also calculated that 92% of Americans had health care in 2023, largely unchanged from the previous year, though the proportion of uninsured children ticked up a half-point to 5.8%.