April 7, 2009

The Phantom Recovery

8 Years

The period from 1999 to 2007 is the longest in modern U.S. economic history in which inflation-adjusted median household income failed to surpass an earlier peak.

While the current economic recession did not begin until December 2007, the eight years prior were in no way a boom to the typical American household. Analysis of Census Bureau data finds that inflation-adjusted median household income — arguably the best single measure of the middle class standard of living — has remained at or below its 1999 peak in every year since then. This eight-year period is the longest in modern U.S. economic history in which inflation-adjusted median household income failed to surpass an earlier peak. However, looking back to 1970, this key indicator has done much better over a longer time frame. These data support the opinions of middle-class Americans: A 2008 Pew Research survey found that while middle-class Americans believe they have a higher standard of living than their parents did, a 56%-majority feel they have not made any economic progress in the past five years. Read More