American household incomes rebounded ahead of the election year, with the typical family locking in a 4% bump in earnings in 2023, according to new U.S. Census data. It’s the first time since 2019 that households have enjoyed a significant earnings increase, the agency said.
Median household income jumped to $80,610 in 2023, roughly on par with Americans’ 2019 earnings level on an inflation-adjusted basis. The income gains also come as inflation eased last year, thanks to a series of rate hikes from the Federal Reserve aimed at cooling the economy.
While the data tracks economic performance from 2023, there are signs that U.S. households have continued to make financial gains so far this year. For one, wages have have been pacing ahead of inflation since May 2023, providing more buying power for budget-pinched consumers.
And inflation has continued to cool into 2024, with economists forecasting the Consumer Price Index sank 2.6% last month on an annual rate, which would mark the smallest increase since March 2021. The government will release the August inflation data at 8:30 a.m. on September 11.
“Today’s data highlight the extraordinary strength of the recovery from the economic crises caused by the pandemic, a recovery driven by policy choices — particularly large fiscal relief and recovery packages — that aimed to quickly heal the labor market,” Elise Gould and Josh Bivens, economists at the left-leaning Economic Policy Institute, noted in a Tuesday research note.
“The rapid growth of household incomes charted in today’s data is powerful evidence that the policy approach of recent years was the right choice,” they added.
The figures could become a talking point in the presidential campaign if Vice President Kamala Harris were to point to them as evidence that Americans’ financial health has largely recovered after inflation peaked at 9.1% in 2022.
But former President Donald Trump might counter that household income grew faster in his first three years in office than in the first three years of the Biden-Harris administration, though income fell during his administration after the pandemic struck in 2020.
— With reporting by the Associated Press.