Rising US incomes defy election narrative

14 Sep 2016   Economy, USA

Household incomes surged last year in the US, suggesting American middle class fortunes are improving in defiance of the dark rhetoric that has dominated the presidential election campaign. A strengthening labour market, higher wages and persistently subdued inflation pushed real median household income up 5.2 percent between 2014 and 2015 to $56,516, the Census Bureau said on Tuesday. This marked the first gain since the eve of the global financial crisis in 2007 and the first time that inflation-adjusted growth exceeded 5 per cent since the bureau’s records began in 1967.  But the increase in 2015 still brought incomes to just 1.6 per cent below the levels they were hovering at the year before the recession started and they remain 2.4 percent below their peak, hit in 1999. Income gains were largest at the bottom and middle of the income scale relative to the top, reducing income inequality. The US election debate has been dominated by the story of long-term income stagnation, with analysts attributing the rise of Donald Trump in part to the shrinking ranks of America’s middle class, rising inequality and the impact of globalisation on household incomes. Tuesday’s strong numbers, which cover the year in which the Republican candidate launched his campaign, cast that narrative in a new light.

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