The Fed Finally Adds Median Income To Its Data

I have given formal presentations about medianism in 4 different countries in 2014: the USA, Lebanon, Mexico, and now Canada.  Two weeks ago I presented at the Mennonite Economic Development Associates (MEDA) Convention in Winnipeg Canada. A lot of the presenters and informal conversations talked about declining median income in the US.   I had not heard much mention of median income at previous MEDA conferences so median income is catching on.  But MEDA is a group that intuitively understands something about medianism because it is a group of businesspeople who cares about both the common good and about the poor in particular.

While gathering data for my MEDA presentation, I checked the US Federal Reserve’s wonderful database of economic statistics (FRED) and found that they finally added median household income to their list of data.  This is a big improvement over last year because it has always been hard for ordinary people to find graphs showing the official government statistics about median income, and FRED provides a wonderful interface to see up-to-date data. Last year I wrote:

…the American government does not even track the kind of median income data that the Fed would need to have to be able to serve the average American better.  The Fed publishes over 83,000 different data series, from the Anchorage Alaska House Price Index to the Z-score for Uganda’s Banks, but it doesn’t have any data about the average American (median).

Since then, the Fed has added a lot more data.  It is now publishing 238,000 different data series including median household income.  Unfortunately, the official median income data is always out of date because the government does not care enough about it to keep it current.  A private company, Sentier Research, had been producing up-to-date estimates of median household income, but they have temporarily suspended their service, so there is no good way to know how well the median American is doing right now.

In contrast, we already know how GDP is doing through the first of October.   That is a little over a month and a half ago.   The announcement of the new GDP data produced a flurry of news articles.  The Wall Street Journal breathlessly announced that “The economy expanded at its fastest pace in more than a decade.”  US GDP has been growing great for more than five years now, but the average American probably doesn’t realize that.  From what we know of the most recent median income data, the average American’s income is still near the bottom of the recession as you can see in the graphs below.

Now that the Fed is finally starting to include median income as valid data, can we get Gapminder to add median income to its list of hundreds of data series?  Gapminder is another incredibly useful way for ordinary people to access and study statistical data.  They care enough about analyzing income distribution, that Wikipedia says that they have produced the “World Income Distribution, an interactive display of statistics on household income distribution for Bangladesh, Brazil, China, India, Indonesia, Japan, Nigeria, Pakistan and USA and the World as a whole in each year from 1970 to 1998.”

Unfortunately, if Gapminder has this data, they don’t give access to it.  They have 519 different data series, but median income isn’t listed.  Gapminder sold some of their technology to Google Public Data and Google does include median income for the US, but Google’s data is less helpful than FRED’s data because Google is even less up to date.  Google’s most recent median income data is almost four years old:

real median income google public dataFor comparison, FRED shows the same information with a different interface but FRED has more recent data and FRED uses 2013 for the inflation adjustment and Google uses 2010, so the whole line is shifted up one the FRED graph.    (Note that I added population growth data to the FRED graph so it would display the Y-axis all the way down to zero like the Google graph does.  US population growth is generally near 1%, so it creates a line that is approximately zero on the graph.)

real median income FREDIn the graph below, I multiplied the per capita income times the average number of people in American households (about 2.6 people per household on average), to get the mean income per household in the US.  The blue line is each household’s ‘share’ of GDP!  It is only approximate because 2.6 people per household is an approximation.  FRED doesn’t include the average household size as one of its 238,000 data series, but I emailed them to ask for them to add it and I’ll give an update when I hear back.

mean vs median household incomeIf median household income had kept up with GDP growth since 1985, the average American would have over $80,000 today (as shown in the red arrow).  That happened from 1984-1989 and from 1994-1999, but median income declined or was stagnant during the rest of this era.

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Posted in Inequality, Macro, Medianism

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