It’s not just higher prices that are squeezing Americans’ finances, as median household income also fell by about $2,000 last year, marking the third consecutive annual decrease.
Adjusted for inflation, median family income dropped to $74,580 in 2022 — a more than 2% decline from the 2021 estimate of $76,330, according to a recent report by the U.S. Census Bureau. That figure also marks the largest decrease since 2010.
While the official poverty rate in the U.S. was not statistically different between 2021 and 2022, the supplemental poverty measure — which accounts for things like government benefits — was 12.4% last year, a more than 4% increase from the previous year. To no surprise, that supplemental measure spiked during a period when many pandemic-era aid programs were rolled back, such as increased child tax credits and the pause on federal student loan payments.
These changes may reflect higher inflation, which has slowed in recent months but nevertheless had a negative impact on Americans’ spending power. Inflation, which hit a 40-year high of 9.1% in June of last year, disproportionately impacts lower-income Black and Hispanic Americans who — on average — dedicate a larger proportion of their income to necessities.
While inflation has cooled over the past year due to numerous interest rate hikes by the Federal Reserve, unemployment has also remained low, leaving many economists wondering when — or if — a looming recession will take hold.
President Joe Biden has leaned heavily on the nation’s low unemployment rate as he campaigns for a second term in office and has been pushing his “Bidenomics” plan that he says focuses on growing the middle class by investing in energy, transportation and infrastructure. However, recent polling shows just 36% of U.S. adults approve of Biden’s handling of the economy.