The Census Bureau has released the household income data for 2010. It is posted on the Census Bureau website. What I’m featuring in this update is an analysis of the quintile breakdown of data from 1967 through 2010 (see Table H.3).
Most people think in nominal terms, so the first chart below illustrates the current dollar values across the 43-year period (in other words, the value of a dollar at the time received — not adjusted for inflation).
The charts below show income growth over the complete data series. In addition to the quintiles, the Census Bureau includes the mean income for the top five percent of households.
The next chart adjusts for inflation in chained 2010 dollars based on a research variant of the Consumer Price Index, the CPI-U-RS. In other words, the incomes in earlier years have been adjusted upward to the purchasing power of the most recent year in the series.
Two things are particularly striking (but not surprising) in the inflation-adjusted chart:
- Income growth has been much higher for the top quintile and particularly the top 5% (the two lowest quintiles are essentially flat).
- The purchasing power of 2010 incomes had shrunk to about the same levels they were more than a decade ago, depending on the segment.
The lack of sustained growth in household incomes is no doubt a major factor in the general decline in consumer confidence over the past decade.
Among the many subtle details evident in these charts, one that especially caught my attention was the fact that the bottom quintile has grown faster than the third and fourth quintiles. This curious fact is not apparent in the dollar charts above.
Also not evident in the dollar charts is the grim reality that in real (inflation-adjusted) terms, households in the bottom quintile earned slightly less in 2010 than they did in 1973 — 37 years earlier. Even the top 5% of households have suffered an uncharacteristic decline, with their mean 2010 real income hovering around the level first achieved in 1996.
I’ll close this commentary with a table showing decline in income for each household segment from its real peak.
This table clearly illustrates a key explanation for the the prolonged decline in optimism in the consumer and small business confidence indicators I track:
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Original source at: Money Game | http://feedproxy.google.com/~r/TheMoneyGame/~3/N9pEqLNshn0/household-incomes-2011-9