Yesterday’s good economic news from the U.S. Census Bureau:
The U.S. Census Bureau announced today that real median household income increased by 3.2 percent between 2015 and 2016, while the official poverty rate decreased 0.8 percentage points. At the same time, the percentage of people without health insurance coverage decreased.
Median household income in the United States in 2016 was $59,039, an increase in real terms of 3.2 percent from the 2015 median income of $57,230. This is the second consecutive annual increase in median household income.
The nation’s official poverty rate in 2016 was 12.7 percent, with 40.6 million people in poverty, 2.5 million fewer than in 2015. The 0.8 percentage point decrease from 2015 to 2016 represents the second consecutive annual decline in poverty. The 2016 poverty rate is not statistically different from the 2007 rate (12.5 percent), the year before the most recent recession.
Economists hailed the news as evidence the recovery is finally taking hold after years of frustration for the middle class, which watched the stock market soar while the average American’s income barely budged.
And yet, there’s still a ways to go, particularly in closing opportunity gaps.
Inequality is still vast in America, with big disparities by race and class. Median income for African-American households was only $39,490 last year, far lower than $65,041 for whites. Asians fared the best, earning $81,431. The rich also continue to get wealthier, while the nation’s poorest families — the bottom 20 percent who earn $24,000 or less — remain worse off financially than they were in 1999.
Still, as the Associated Press reports, there’s been widespread improvement.
The improved incomes have been widely shared. African-American median household income jumped 5.7 percent to $39,490 year over year. Among, Latinos it rose to 4.3 percent to $47,675. For whites, the gain was 2 percent to $65,041.
As our office has pointed out repeatedly in the past year, the Great Recession did not kill the business cycle. It just felt that way given the severity of the recession. Now that the expansion is reaching all corners of the economy and incomes are rising for those in the middle and bottom part of the income distribution, it is clear the feel-good part of the business cycle is here. Of course there is still much more room for further improvements.
A growing economy is key to expanding upward mobility and opportunity.