US median income lowest since 1995
|September 12th, 2012, 09:21 PM||#1 (permalink)|
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US median income lowest since 1995
The median income of American households dropped to its lowest level since 1995 last year, extending its decline during President Barack Obama’s tenure and highlighting the depth of the damage to the middle class inflicted by the recession and weak recovery.
According to annual data from the Census Bureau, median income adjusted for inflation – a closely watched measure of the financial health of average Americans – fell to $50,054 in 2011, or 1.5 per cent below its 2010 level and 4.1 per cent below its score when Mr Obama took office in 2009.
Although real median income had already started to slide beginning in 2008, before Mr Obama entered the White House, the fact that he was not able to reverse that downward trend could expose him to criticism from Mitt Romney, his rival, that his policies have not aided the middle class. In addition to the drop in overall median income, the data also showed a rise in income inequality last year.
The release of the dire median figures also offers the latest reminder of the sluggishness of the recovery, marked by high unemployment and weak job creation, which is prompting Federal Reserve officials to consider a new round of monetary easing as early as Thursday.
But while the data on income will have been discouraging for Mr Obama, other elements of the report were more upbeat. For instance, the poverty rate dropped slightly, from 15.1 per cent to 15 per cent, as fewer middle-class Americans struggled so much that they had slid under the poverty threshold of about $23,000 in annual income for a family of four.
Also, the Census Bureau said that the number of people without health insurance cover declined from 50m in 2010 to 48.6m in 2011, along with the percentage of people lacking coverage, which fell from 16.3 per cent in 2010 to 15.7 per cent in 2011.
This will allow Mr Obama to show that his 2010 health reform is already starting to have an effect on the number of uninsured, even though many of the provisions have not kicked in yet. For instance, young Americans under the age of 26 are now allowed to be covered under their parents’ plans, reducing the number of youth without medical insurance.
The fresh data on income, poverty and health insurance coverage was delivered as the race for the White House enters its final stretch. With little less than eight weeks to go before voters head to the polls in early November and the sluggish economy at the top of the agenda in many swing states, both Mr Obama and Mr Romney have attempted to demonstrate that they would be best candidate to deliver relief to middle-class Americans.
Mr Obama is championing higher taxes on the wealthy in order to protect government spending on programmes that aid the middle class as the best recipe for the country. But the census data could dent a small burst of rising confidence in the economy that has showed up in polls by Gallup and Reuters/Ipsos since last week’s Democratic convention.
Gene Sperling, director of the National Economic Council at the White House, said the data reinforced the need to move forward with Mr Obama’s policies, some of which have been blocked by congressional Republicans. “While we have made progress digging our way out of the worst economic crisis since the Great Depression, too many families are still struggling and Congress must act on the policies President Obama has put forward to strengthen the middle class and those trying to get into it,” Mr Sperling wrote in a blog post.
Mr Romney, a former private equity executive, has promised to use his business expertise to create a better environment for hiring and investment that he claims would directly benefit middle-class Americans.
“Today’s report confirms that the American dream remains out of reach for too many Americans,” said Andrea Saul, a Romney campaign spokeswoman. “While this may be the best President Obama can do, it’s not the best America can do”.
The annual census data can often become a critical reference in US political campaigns. Mr Obama and Democrats in Congress effectively used the stagnation of median household income during the administration of George W. Bush to target Republican economic policies during the congressional election of 2006 and the presidential election of 2008.
Real median household income reached its peak at $54,932 in 1999, 8.9 per cent above its current level, under President Bill Clinton and has not been below $50,000 since 1995. Under President George W. Bush, it fell to $52,778 by 2004 before recovering to reach $54,489 in 2007 and then sliding again in 2008.
US median income lowest since 1995 - FT.com