Study: Average household income down more during recovery than during recession

posted at 1:43 pm on November 1, 2011 by Howard Portnoy
[ Fiscal Stimulus ]   

Remember Recovery Summer? It was a joyous period of history when Americans began to experience the fruits of the American Recovery and Reinvestment Act, signed into law a year earlier by newly elected President Barack Obama. Countless out-of-work Americans found employment repairing highways, weatherizing homes, beautifying our national parks, and making our water supply cleaner and more drinkable than ever.

If you don’t remember those halcyon days, it may be because they never happened. In fact, the recovery itself didn’t really happen, at least not according to the standard definition of the term. The Weekly Standard reports:

Figures from the Census Bureau’s Current Population Survey, compiled by Sentier Research, show that the ‘recovery’ has actually been harder on most Americans than the recession from which they’ve allegedly been recovering.

In fact, the median American household income has actually fallen during the “recovery” and it has fallen more than it did during the recession. The Standard quotes Gordon Green, former chief of the Governments Division at the U.S. Census Bureau and a co-author of the report as saying:

Real income fell by 3.2 percent during [the recession]. And during the recovery it went down by 6.7 percent, [meaning that] income [has] declined twice as much in the recovery as in the recession itself.

The Standard article continues:

In early 2000, Americans’ median annual household income was $55,836, in real (inflation-adjusted, June 2011) dollars. By the start of the recession (in December 2007), Americans’ real incomes had fallen 0.9 percent, to $55,309—a decline of $527. During the recession (which ended in June 2009), their incomes fell an additional 3.2 percent, to $53,518—a decline of another $1,791. During the first two years of the “recovery” (from June 2009 to June 2011), they fell an additional 6.7 percent, to $49,909—a decline of another $3,609.

A chart from the Sentier report shows the median household expressed as index, starting at 100 in January of 2000. As you can see by following the red line the decline has been more precipitous since Barack Obama took charge of the economy in January of 2009. Fun fact: During Recovery Summer, the household income index stayed level (at just under 92), then plunged about two tenths of a point right after.

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