America’s middle class is booming.
Between 2015 and 2016, US median household income rose 3.2% from $US57,230 to $US59,039, according to a new report released by the U.S. Census Bureau on Tuesday.
It’s now the highest income year on record, beating the previous high of $US58,655 in 1999 (all numbers are adjusted for inflation).
The US poverty rate simultaneously declined about 1% to 12.7%, returning to nearly the same level as in 2007, prior to the recession. In total, 2.5 million fewer people were in poverty in 2016 than in 2015.
Plus, almost every demographic group experienced a rise in incomes last year, according to the Census, thanks to more Americans securing full-time and better-paying jobs — a total year-over-year rise of about 2.2 million workers.
While that’s a positive indication of the ongoing recovery for the middle class, the increase isn’t necessarily a boon for the average household.
The annual median income rise breaks down to an extra $US150 a month — before taxes. With the rising cost of healthcare, record-breaking student loan debt, and increasing housing costs, it won’t make a huge difference in disposable income for many people, if at all.
But there’s likely been a boost in financial security for Americans invested in the stock market. Stocks continue to soar to record-highs, with the S&P 500 up over 10% in 2017. The index, which represents the 500 largest publicly-traded companies in the US, has grown by over 250% since its lowest point in March 2009 during the financial crisis.
Ultimately, income inequality remains stark in America as the rich continue to build more wealth and the country’s bottom 20% of earners become worse off. According to Pew Research Center data, the middle class population has been declining for four decades.
But identifying with the middle class is, in part, a state of mind. Those who call themselves middle-class — even if they aren’t — had more near and long term optimism about the US economy, the markets, and obtaining the American Dream, according to the report from Northwestern Mutual.
We’ll toast to that.