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Prediction #5: Median Household Income Will Decline

Five Predictions for 2014

Prediction #5: Real Disposable Median Household Income Will Continue to Decline.

My guess is another $300 to $500 reduction.

Here is real disposable median household income for the past six years:

2007 = $56,189
2008 = $55,484
2009 = $53,760...
2010 = $52,703
2011 = $51,557
2012 = $51,371
2013= Is going to be right about at 2012 levels, maybe a tick higher (best guess)

Household income, adjusted for inflation, is down about 10 percent from pre-Great Recession levels. Clearly, households are not better off, and the trend continues to point to lower and lower levels, even though we are five years post-recession. Some data sets will show a marginal 2% improvement over the past two years. Other data sets point to continued declines.

My prediction: the median household will not be better off next year, in fact it will be worse off, because of 1) increasing taxes and their impact on prices and take-home, after-tax pay, and 2) the increased personal costs of ACA health care costs and commodity price increases to the individual worker.

The saving grace could be a bump in real wages and hours worked, but I am not holding my breath, as hours and wages continue to suffer from persistent employer jitters.

Happy New Year!!!

 

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