Home > Uncategorized > Doug Short: U.S. Household Incomes: A 44-Year Perspective – Business Insider

Doug Short: U.S. Household Incomes: A 44-Year Perspective – Business Insider

September 19, 2012 Leave a comment Go to comments

Doug Short: U.S. Household Incomes: A 44-Year Perspective – Business Insider.

Most people think in nominal terms, so the first chart below illustrates the current dollar values across the 44-year period (in other words, the value of a dollar at the time received — not adjusted for inflation). What we see are the nominal quintile growth patterns over the complete data series. In addition to the quintiles, the Census Bureau publishes the income for the top five percent of households. It’s important to understand that the data is for the mean (average) income for each of these segments. For US households quintiles, the mean (average) income is higher than the median (middle of the range). I’ll have more to say about this negative skew in a follow-up article on household incomes by age bracket.

advisor perspectives

Advisor Perspectives

The next chart adjusts for inflation in chained 2011 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.

advisor perspectives

Advisor Perspectives

As for the cumulative household income growth by segment over the past 44 years, the adjacent table shows the real, inflation-adjusted, difference between 1967 and 2011.

To give us a better idea of the underlying trends in household incomes, I’ve also prepared charts of the nominal and real percentage growth since 1967. Here is the real version with some annotations. Note in particular the growing spread between the top quintile (and especially the top 5%) and the other four quintiles.


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