Median household income headlines are misleading

Median household income headlines are misleading

Household income is off its historical highs.

During the past several weeks, this column has focused on the state of the general economy and potential implications for beef demand and the beef industry.  The columns highlighted several key economic indicators, including:

  1. Job creation since the financial crisis;
  2. Trends in family wealth between 1998 and 2013;
  3. Food spending as percent of disposable income

Let’s continue that discussion by looking at household income, which has been actively reported on during the past week. The interest by the media was generated when the U.S. Census Bureau released new data related to median household income. The headlines have generally read something to the effect of, “household income up 5% in 2015.” 

This week’s graph provides some historical context around the new data. Indeed, real household income increased 5% to $56,500 in 2015 versus 2014 ($53,700). However, the longer view provides a somewhat different perspective. 

real median U.S. household income

The three-year moving average equals $54,920. Meanwhile, the 2015 mark still falls short compared to previous peak years in which the median income exceeded $57,000. Those years were 1999, 2000 and 2007. In other words, household income still hasn’t fully recovered to its prior peak established in 2007 just before the financial crisis.

Considering the previous discussions, and in light of this new data, how do you interpret the current state of the economy? Is the U.S. tracking amidst economic recovery? Or will the economy sputter in the coming years? Given your assessment, what implications might that have on beef demand and agriculture? Leave your thoughts in the comments section below. 

Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited. The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.

 

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