US inflation-adjusted household income fell in 2022 by the most in over a decade, highlighting the toll of a higher cost of living and the expiration of pandemic-era programs.
The median income last year was $74,580 compared with $76,330 in 2021, according to the Census Bureau’s annual reports on income, poverty and health insurance coverage.
The 2.3% drop in incomes — which was the most since 2010 — marked the third-straight annual decline, which has been a feature of past recessions like the global financial crisis, the dotcom bubble and the downturn in the early 1990s. Last year, American families faced the the largest annual increase in the cost-of-living adjustment in over four decades.
The report paints a concerning picture of the financial health of American families halfway through Joe Biden’s presidency. Even as the economy remains strong by many measures and inflation has cooled significantly from last year’s peak, it’s still proven a to be a political roadblock as Biden seeks a second term.
Tuesday’s data include two gauges of poverty. The official US poverty rate — which is calculated before taxes and excludes stimulus payments and tax credits — edged lower to 11.5% from 11.6% in the prior year. The rate has been roughly cut in half over the past six decades, and reached a record low before the pandemic.
However, the supplemental poverty measure — which is based on post-tax income and includes government-transfer payments like stimulus checks — rose to 12.4% last year. It was the first increase since 2010, which in part reflected the end of government pandemic-era programs and stimulus payments.
For children, the SPM rate more than doubled last year after the expiration of the advance child-tax credit. The benefit, which was expanded in 2021 as a part of Biden’s signature American Rescue Plan, gave families as much as $300 per child per month.
The figures also help explain why Americans have felt like they’re in a recession, even as the economy bounced back quickly from the initial Covid downturn. Hourly earnings have only just started to outpace inflation in recent months after lagging for two years, and measures of consumer sentiment remain well below pre-pandemic levels.
The so-called Gini index — a measure of income inequality — fell to 0.488, indicating a narrowing of the gap as pay among the highest earners decreased. A Gini coefficient of zero reflects perfect equality, where all income or wealth values are the same, while a Gini coefficient of 1 (or 100%) reflects maximum inequality.
Median incomes at the 90th percentile fell to $216,000 in 2022, while incomes for those among the bottom 10th ticked up to $17,100.