It’s not just high prices that are squeezing Americans’ finances, but the median household income also declined by nearly $2,000 last year, the third consecutive annual decline.
Adjusted for inflation, median household income will fall to $74,580 in 2022 — a more than 2% decline from the 2021 forecast of $76,330, according to a recent report US Census Bureau. The figure also marks the largest decrease since 2010.
While the official poverty rate in the US was not statistically different between 2021 and 2022, the supplemental poverty measure – which accounts for things like government benefits – was 12.4% last year, an increase of more than 4% from the previous year. Is. Not surprisingly, that supplemental measure increased during a period when many pandemic-era aid programs were rolled back, such as an increase in the child tax credit and a pause on federal student loan payments.
These changes may reflect higher inflation, which has slowed in recent months but still has a negative impact on Americans’ spending ability. Inflation, which hit a 40-year high of 9.1% last June, disproportionately impacts low-income black and Hispanic Americans, who – on average – devote a larger share of their income to necessities.
While inflation has moderated over the past year due to several interest rate hikes by the Federal Reserve, unemployment also remains low, leading many economists to wonder when — or if — a looming recession will take hold.
President Joe Biden has leaned heavily on the country’s low unemployment rate while campaigning for a second term in office and pushing his “Bidenomics” plan, which he says will focus on economic growth in energy, transportation and infrastructure. Focuses on growing the middle class by investing. However, recent polling shows that only 36% of American adults approve of the way Biden is handling the economy.