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October 09, 2008

Recent income changes

Economists get excited about things that wouldn't get a second glance from most of us. One of these sources of excitement is the release each year from the U.S. census of a report on household income changes. With that report now in hand, did we gain or lose income last year?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, there are all sorts of sources of excitement, and this is something that economists do get all excited about. The good news is that if you look at median household income and you take out inflation, we actually see that the average household saw an increase in their income from 2006 to 2007, from a little over $49,000 to about $50,000. Perhaps more interesting though is how incomes of households at different income levels changed. And here we had a break in the trend. What we saw from 2006 to 2007 was those households at the lowest end of the income ladder saw slight declines in their household income as did - and this is the interesting part - households at the highest end of the income ladder. It was households in the middle part of the income spectrum - so-called middle-income households - that actually saw the biggest increases in household income. And this is totally different than what we've seen over the last 25 years. So we don't know if this is a break in that trend, but certainly what happened in the last year with household income has been very different than what's happened in previous years."

Posted by Dave at October 9, 2008 08:00 AM