Free Markets, Free People

Indicators: Household income drops to levels below that of the recession

Another sign or indicator of how the upcoming Presidential election may go may be found in the level of household income.  It’s down.  In fact it is down to below the levels it had fallen during the recession.

Household income is down sharply since the recession ended three years ago, according to a report released Thursday, providing another sign of the stubborn weakness of the economic recovery.

From June 2009 to June 2012, inflation-adjusted median household income fell 4.8 percent to $50,964, according to a report by Sentier Research, a firm headed by two former Census Bureau executives.

Incomes have dropped more since the beginning of the recovery than they did during the recession itself, when they declined 2.6 percent, according to the report, which analyzed data from the Census Bureau’s Current Population Survey. The recession, the most severe since the Great Depression, lasted from December 2007 to June 2009.

Overall, median income is 7.2 percent below its December 2007 level and 8.1 percent below where it stood in January 2000, which was at $55,470, according to the report.

Of course, being an average, the impact has been both far reaching and deep.  That means personal.  We’re not discussing some esoteric issue that seems more abstract than real or some policy which may never effect voters.   We’re talking about their family’s income, what they take home, the means by which they support their family.

This drop speaks to millions of jobs lost, those who have found jobs likely to be under employed, belt tightening among households to get by.

If someone asked the question, “are you better off now than you were 4 years ago”, the answer for a very large portion of America would be “no”.

The next question then, maybe not asked out loud, but certainly considered is: “are you willing to give the President 4 more years considering what has or hasn’t been accomplished this 4 years?”

Again, other than the ideologues and the yellow-dog voters, that’s a question a vast majority will answer when they pull the curtain on the voting booth.  Given history and the indicators we keep seeing, I believe the answer to that question is also going to be “no”.

~McQ

Twitter: @McQandO

Facebook: QandO

33 Responses to Indicators: Household income drops to levels below that of the recession

  • Why Romney isn’t asking the Reagan question “Are you better off now than you were 4 years ago”? at every opportunity is political malpractice.  That should be on every web ad, every sign, every bumper sticker, every campaign TV ad, every stump speech, every surrogate appearance on the weekend political shows, every interview, of Romney and Ryan both.
    There’s 75 days left.  Start asking that question.  Find the people whose answer to that is no.  Tell their stories.  Romney should be winning by double digits.  His refusal to ask this question is a major part of why.

    • I hope Romney does start asking that question. He would do well to bring it up at the debates, at the first opportunity.

    • Add to it … “Where’s the beef ?”  (i.e. Obama is a man without a plan, even Russians have a plan when they dump).

    • Because Romney is not going to get any free media airtime on those remarks.
       
      They will have to use their campaign money to get airtime for that.  And for some reason they are waiting until after the convention.  Add to that, the Convention should have happened a month ago.

  • Incomes have dropped more since the beginning of the recovery than they did during the recession itself

    I think maybe someone has their nomenclature wrong.  I ain’t seen no steeenkin recovery.

  • For the sake of clarity, that is not an average. It is the median which is a better measure of central tendency when you you have data with wild tales. Not trying to be a dick.

  • “The next question then, maybe not asked out loud, but certainly considered is: “are you willing to give the President 4 more years considering what has or hasn’t been accomplished this 4 years? Again, other than the ideologues and the yellow-dog voters, that’s a question a vast majority will answer when they pull the curtain on the voting booth.  Given history and the indicators we keep seeing, I believe the answer to that question is also going to be “no””

    That’s true, and a pretty good indicator of how people will vote, but there’s also the question of who they will blame. At the moment, far more people blame banks (54%) or Bush (44%)than Obama (34%) . So the question is whether people who blame Bush will transfer that blame to Romney or not.

    This is not a new phenomenon, this has been going on since the 80′s, it’s just accelerating now.

    Here’s a thought, we have been talking about crony capitalism and the fact that it precludes a free market. For the last 30 years, supply side theory has been used as the rationale behind many policies. Have you considered the possibility that the supply side policies were really just more crony capitalism? I mean that if we don’t have a free market, economic theories, even if valid, won’t really apply.
    “The idea of a large, stable middle class is central to America’s sense of itself. But the U.S. middle class has been steadily shrinking, dropping from 61% of all adults 40 years ago to a bare majority now, a new study finds.

    The Pew study found that some of the shrinkage in the middle class came from people moving into the upper-income tier, which represented 20% of the nation’s adults in 2011, up from 14% in 1971. The lower-income group rose to 29% of all adults, up from 25%.
    But the money only went in one direction, Taylor said. Over the same period, only the upper-income group increased its share of the nation’s overall household income and now accounts for 46% of that total, up from 29% in 1971. The middle class garnered 45% of the total, down from 62% four decades ago. The lower-income group took in 9%, down from 10%.
    Since 2000, the median income for America’s middle class has fallen from $72,956 to $69,487, the researchers found. But net worth plummeted over that period, with the median declining by 28%, erasing two decades of gains.
    Overall, the middle class is now smaller, poorer and more pessimistic than previously, the researchers found.
    Although the recession ended, at least technically, in 2009, its effects linger. The report found that middle-class Americans said they continue to struggle, with most reporting that they have had to cut spending in the last year. Fewer than a decade ago said they expected hard work to bring them success.
    And 85% of middle-class Americans said it was harder now than a decade ago to maintain their middle-class lifestyles.
    Of those who felt that way, 62% said “a lot” of the blame lay with Congress. About 54% blamed banks and financial institutions, 47% said the same about large corporations. More people placed blame with the previous Bush administration (44%) than did with the administration of President Obama (34%).”

    http://www.latimes.com/news/local/la-me-0823-middle-class-20120823,0,6206289.story

    • The alternative tis to ask if he couldn’t get much done when he had a Democratic Congress, how does anybody expect him to do anything if Congress goes completely Republican.
      The man doesn’t know how to negotiate.  In a one party town like Chicago, the political class never learns those skills.

      • His voters don’t believe that his party actually controlled Congress. Because otherwise many of their complaints are very strange…like why didn’t Obama raise taxes if he really wanted to do that?

        • “why didn’t Obama raise taxes if he really wanted to do that?”

          Are you pretending you don’t know the answer to this, or do you really not know?

          Obama had no desire to raise taxes in 2009 and 2010 but felt that when the tax cuts were scheduled to sunset would be a good time to implement his tax plan.

          Clearly he was not counting on losing the majority before this.

        • His party controlled Congress before he got into office.

          • Capitanus’ BS FULLY explains why Obama supported, then signed, the extension of the Bush rates.
            Right…???

      • It takes two to negotiate.

        My question would be if you have a Speaker who can’t corral the votes for ANY compromise, what is there to negotiate? When Boehner was trying to negotiate the debt reduction deal, Cantor flat out told him that he doesn’t have the votes to make ANY revenue offer.

        It’s really simple, Democrats will vote for spending cuts and revenue increases, but not just spending cuts.

        Republicans will ONLY vote for cuts, period.

        There is no room for compromise or negotiation, there is only the game of chicken as we head toward the fiscal cliff.

        • The Democrats won’t vote for spending cuts or revenue increases. They will negotiate smaller increases in spending if they get tax increases (especially on the rich). But there’s no evidence they will cut spending and plenty of evidence that tax increases don’t correlate to revenue increases.
           

    • If the graveyard makes you uncomfortable, stop walking by it, but man, whistle a different tune once in a while can’t ya?   The Hallelujah Obama Chorus is getting old.
       
      How about some Vivaldi or maybe the Brandenburg Concertos.

      • I’m put in mind of the great Lauren Bacall line: “You know how to whistle, don’t you?  You just pucker up and blow“.
        Seems a natural when you think of Capitanus and Obama.

  • Real incomes dropping ?   Blame it on the Federal Reserve and the Treasury.   Well, in fairness to them, if the federal government wasn’t running a huge deficit, they wouldn’t be doing it.
    I love it when I see Progressive say something so incredibly stupid like … “We aren’t bankrupt as long as we can sell Treasuries.”
    Over at ZeroHedge, they have been reporting on how the supposition is meaningless at best, but probably utterly silly.
    It seems that the Treasury has been holding it’s regular T-bill auctions, but there are always these buyers who scoop them up, then sell them to the Federal Reserve within a few days.
    Plain and simple, they are just printing money.   The auctions are just for show (and to see if they can sucker anybody).  Undermining the value of the dollar by this quasi-stealth dollar devaluation.
    Put together near 0% interest on T-bills and CDs and devaluing of the dollar, and it’s no wonder that real incomes are going down.

    • I have some very smart progressive friends explain that the US can never go bankrupt, that we can borrow forever, or print forever.
      Technically that’s true. But its a difference without much distinction, and thus stupid to say it.
      I did have one Democrat actually change their mind on deficit spending being viable forever, when I showed that once debt/GDP goes above a threshold its slows growth. I was sort of amazed that the guy actually took in the data and then adjusted his thinking.

      • Technically, the U.S. cannot go “bankrupt”, since that entails a court-administered process according to a set of laws.
        We certainly can go into default, and we certainly can go into a condition where our debt is unsustainable, and out debt instruments worthless.
        Which would be catastrophic.

      • “once debt/GDP goes above a threshold its slows growth”

        This is pretty common knowledge and I don’t know a single Democrat, or Republican, who thinks otherwise.

        Except of course every Republican when Bush was President and we ran up debt when there was absolutely NO NEED to spend more than we took in.

        Pop quiz hotshot: Who said “Deficits don’t matter”.

  • Meanwhile in New York, developments are indicating you may be safer walking down the street next to a murderer than you are when the police show up to apprehend him.
     
    I don’t suppose Bloomberg will suggest disarming the cops once the investigation ends, but I’m betting more of the shooting victims will have been hit with whatever caliber the cops have than what the murderer had.

    • Distorted question – is it a ‘mass shooting’ when the police did most of it?

      • Soon to disappear from the headlines – suddenly no mass shooting, police wounding 9 people causing only ‘minor’ injuries, Bloomberg and media outrage over the shooting?  scheduled for the silence of the deeps.
         
        Literally “move along nothing to see, return to your homes, all is well”.

  • Unexpectedly!

  • Pop quiz hotshot: Who said “Deficits don’t matter”.

    A question from an idiot.
    The answer is “many people said that”.
    And it was true when debt levels were manageable.
    As we’ve noted here many times, a business taking on debt is a PRUDENT thing to do, provided they can service the debt and marginal returns are positive.
    BUT that NEVER means you go out and take on HUGE debt to buy the “ego jet”, since that is a formula for business failure.
    Moron.

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