From the WSJ:
Surging inflation gobbled up household income gains last year, making 2022 the third straight year in which Americans saw their living standards eroded by rising prices and pandemic disruptions.
Americans’ inflation-adjusted median household income fell to $74,580 in 2022, declining 2.3% from the 2021 estimate of $76,330, the Census Bureau said Tuesday. The amount has dropped 4.7% since its peak in 2019.
The figures add to the picture of the economic challenges facing households since Covid-19 hit in early 2020. Inflation hit a four decade high last summer as the pandemic upended supply chains and the Ukraine war drove up energy prices.
This year could be different. Earnings and inflation trends have improvedas a strong labor market and cooling price increases boosted household purchasing power, said Bill Adams, chief economist at Comerica Bank.
“Shifting into the present and into the future, the prospects are better for wages to make up for some of the ground lost during the last couple of years,” Adams said.
Wage growth for the typical worker outstripped inflation starting in December 2022, with inflation-adjusted wages rising about 3% in July, according to data from the Atlanta Fed Wage Tracker and the Labor Department.
The Census Bureau, in its annual report card on the financial well-being of U.S. households, said median household incomes in 2022 dropped by 3% to 5% in the West, Northeast and Midwest, while the South was unchanged.
A broader unofficial measure of poverty that accounts for taxes and noncash government aid rose sharply last year to 12.4% for the overall population and children. The increase was linked to the expiration of several pandemic-related tax credits, especially one for children, according to Liana Fox, an assistant division chief at the bureau.
Both poverty measures stand slightly above lows reached in 2019 ahead of the pandemic.