The Associated Press reports today:
The average income of American families, after adjusting for inflation, declined by 2.3 percent in 2004 compared to 2001 while their net worth rose but at a slower pace.The Federal Reserve reported Thursday that the drop in inflation-adjusted incomes left the average family income at $70,700 in 2004. The median, or point where half the families earned more and half less, did rise slightly in 2004 after adjusting for inflation to $43,200, up 1.6 percent from the 2001 level.
The median, or midpoint for net worth rose by 1.5 percent to $93,100 from 2001 to 2004. That growth was far below the 10.3 percent gain in median net worth from 1998 to 2001, a period when the stock market reached record highs before starting to decline in early 2000.
This news will not come as a surprise to anyone who's been paying attention. Although if you are a typical news consumer you'll have to be paying very close attention indeed to be well informed on this bundle of issues. The press coverage is bad as measured by absolute standards--# of stories, # of column inches. It's even worse if you measure it by what really matters--public knowledge. Most US Americans are delusional about the class system. Maybe the news in the world couldn't counter the weight of ideology. It would be nice to give it a try.
The interesting thing to me is that the median rose while the average fell. Of course the average is way above the median because of the sheer size of incomes at the top of the scale. The decline in the average would be explained by the stagnation of investment income in the years after the dot.com bust. The rise in the median, meanwhile, is pathetically small, and amounts practically to a recession in household income because the adjustment for inflation fails to take into account the generation of new needs--the essence of a capitalist economy. You can get some measure of that factor by looking at the growth in credit card debt.
News happens best when the upper middle class is threatened. I state that as a general proposition. The well being of the working class has been under stress for decades now. But media attention comes into sharp focus only when the better off have something to wail about. So you'll hear a lot about the alternative minimum tax this year. You'll hear little or nothing about the minimum wage, even if there's a serious election-year move to raise it. This class bias in the news is not remarkable; I can't say for sure if anyone even bothers to dispute it. If it's explainable by market forces, then it's ok, or so the dominant discourse seems to think.
Living abroad convinces you immediately of a few things. First, the vaunted wealth of the US doesn't seem like much when you consider the value of the publicly provided goods and services that most of the world enjoys. Second, the US has a fetish about home ownership that makes little economic sense. Third, the US has lost a lot by turning over so much of its retail to big box stores. Consumers get more choice on one level but far less variety on the more important cultural level.
The scary thing is that the US economy depends on consumer spending for about 2/3 of its action. What will happen when people stop spending money they don't have on shit they don't need?