Third time’s not the charm: US incomes fall again

Sometimes, bad things come in threes, like the number of Star Wars prequels with a Jar Jar Binks cameo.

And now, for the third straight year, US incomes fell, according to new Census Bureau data.

In 2022, the median household income fell to $74,580, adjusted for inflation. That’s a 2.3% decline from 2021’s median estimate of $76,330, according to the Census Bureau. And the latest figures mark a 4.7% drop from a 2019 peak of $78,250.

Meanwhile, earnings for both part-time and full-time workers fell 2.2% between 2021 and 2022. For full-time, year-round workers, median earnings dropped 1.3% in 2022.

One small bright spot: The Gini index, a measure of income inequality, modestly improved. The income gap between high- and low-income households decreased by 1.2% between 2021 and 2022, marking the first annual decrease since 2007.

In all, though, the latest Census data provides a snapshot of American households’ economic troubles, and the abundance of cash-strapped workers has created new challenges for CFOs.

That said, the three-year streak could come to an end next time around.

While inflation ticked higher in August, it has cooled in recent months, a marked change from its previous consistency: Inflation dropped to 3.2% in July, down from 9.1% in June of the previous year. Meanwhile, “a strong labor market and cooling price increases” have buoyed purchasing power for consumers, Bill Adams, chief economist at Comerica Bank, explained to the Wall Street Journal.

“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.