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Wage growth failed to keep pace with searing inflation last year, resulting in a drop in U.S. household incomes for a third year in a row, according to Census Bureau data released Tuesday.
Inflation-adjusted annual median household income dropped to $74,580 in 2022, falling 2.3 percent from the 2021 estimate of $76,330, the Census Bureau reported, off 4.7 percent since its peak in 2019.
The data reflect the heavy toll of pandemic supply chain issues and higher prices on the wallets of average Americans, with inflation notching to a four-decade high in the summer of 2022 and energy prices shredding household incomes amid the Russian-led war on Ukraine.
The rising cost of housing, energy, transportation, food and consumer goods since the pandemic have resulted in elevated rates of homelessness across the country – with even publications such as The Wall Street Journalshowcasing the impact of homelessness on affluent communities and baby boomers.
As the U.S. Federal Reserve prepares to meet next week to determine whether to continue its campaign of boosting interest rates – which has increased the cost of borrowing for Americans seeking credit, loans and mortgages – there are promising indications the trend may be reversing.
According to data from the U.S. Labor Department and the Atlanta Fed Wage Tracker, wage growth outpaced inflation in December of last year, with inflation-adjusted wages edging up around 3 percent in July.
For an excellent visual of what the wage-versus-inflation trajectory has looked like since the pandemic, see the below chart from Statista showing the differences between the U.S. inflation rate and wage gains from January 2020 to July 2023.
Here’s to a (hopefully) smoother road ahead.
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