Good News on Income – Econlib

The latest figures from the Bureau of Labor Statistics reveal some positive news on household and individual income in the United States. Real median household income in 2024 reached a record high of $83,730, signaling a reversal of the downward trend that began during the pandemic in 2020. Additionally, real median individual income also hit a new peak at $45,140 in 2024. These numbers continue a long-term trend of income growth that has been ongoing since the 1980s.

Contrary to popular narratives from both the Left and the Right, American incomes are not stagnant. Real median household income has increased by 38.6% since 1984, while real individual median income has seen a 57.1% rise since 1974. These figures indicate a general upward trajectory in incomes over the years, debunking claims of stagnation.

The growth in real income is closely tied to the overall performance of the economy. Stagnation tends to occur during recessionary periods, while growth occurs during periods of economic expansion. Despite concerns such as tariffs, weak employment, high inflation, and economic isolationism in the short term, the long-term outlook for the US economy remains positive. It is essential to analyze the data and draw optimism from the positive signals it conveys.

It is important to note that “real” income refers to inflation-adjusted figures, while “median” income represents the point where half of households are above and half are below a certain value, excluding outliers. These results are not driven by inflation or gains solely by the super wealthy.

The data on real median household income dates back to 1984, while individual income data goes back to 1974. Given the correlation between household and individual income, it is likely that household income was also on the rise before 1984. Claims that the US has been in a recession since 2022 lack empirical and theoretical support. For a critique of this argument, UW-Madison economist Menzie Chinn’s paper “America in Recession Since 2022? A Critique of Antoni-St. Onge” provides further insights.

In conclusion, while there are short-term challenges facing the US economy, the long-term trend of rising incomes is a cause for optimism. By analyzing the data and understanding the economic signals, we can combat defeatism and maintain a positive outlook for the future.