Why you're feeling poor despite the recovery

American households have yet to regain income lost during the financial crisis. The median level is still $3,400 lower.

By Aimee Picchi Aug 22, 2013 1:15PM

Man holding empty wallet (© CharlesSturge.com, Image Source, Getty Images)Nearly six years after the start of the recession, much of America's economy is getting back on track, from the housing market to unemployment levels. 


So, why do so many Americans feel poor? That's because median household income is still nowhere near its level from before the financial crisis, according to a study released by two former Census Bureau officials. 


Median annual household income was $52,100 in June, still $3,400 lower than in December 2007, when the recession began, The New York Times reports, citing the study.


While most economic indicators compare month-to-month or year-over-year gains or losses, the study provides the unusual perspective of considering what Americans have lost since the start of the global recession.


For many, the past few years have hit their pocketbooks in painful ways, explaining why so many families feel economically insecure despite the official end of the recession. 


For instance, June's median annual household income of $52,100 is an improvement from recent inflation-adjusted bottom of $50,700 in August. But because Americans still aren't back to pre-crisis income levels, that may explain why a majority of them feel the country is still suffering from a recession. 


Not every group in America is suffering equally, however. The biggest drops in median household income have come at the expense of those already lagging: African Americans, those without college degrees, young people and Southerners. 


"Based on our data, almost every group is worse off now than it was four years ago, with the exception of households with householders 65 to 74 years old," said Gordon W. Green Jr. of Sentier Research in a statement. 


Householders between 65 to 74 benefited from a 5.1% increase to their median income, the only group to show a statistically significant gain, the researchers said. At the same time, households headed by people under 25 years old saw median annual income decline 9.6%, while African-American households witnessed a slip of almost 11%, the study found.


Perhaps even more dispiriting, in going back even further the study found that overall American household income is 7.2% lower than in 2000, before the Internet boom ended in a bust and the recession in the early part of that decade. 


The erosion of American household income may explain why Wal-Mart (WMT) and other retailers are reporting disappointing sales trends. After all, consumers with less money in their pockets aren't likely to buy new products, regardless of how low the price.


Follow Aimee Picchi on Twitter at @aimeepicchi.


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234Comments
Aug 22, 2013 3:08PM
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Recession ended? Whos freakin fake stats are you going by? Unemployment down? Maybe thats because people ran out of funds to draw from. Job rate up? Maybe thats only due to recovery from disasters. When thats done there will again be a lack of jobs. Get real the we haven't recovered and the recession turned into a depression long ago
Aug 22, 2013 2:52PM
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My wife & I were making a combined $ 175,000 per yr in 2008. I am in healthcare and was layed off in 2010, she is in finance and lost her business due to the recession. We are both working again, lost most of our retirement because we pay our bills. Something seemed to change in 2009. Hmmm??????????? We are all so screwed, just 47% are so clueless they don't even know it. Wait until the checks stop!!!
Aug 22, 2013 1:50PM
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hope and change!

 

people making less money than when bush was in office, and paying higher taxes now too on less money.  that definatly change!

 

nice one liberals

Aug 22, 2013 3:35PM
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I WISH the market shills would STOP using the word 'recovery' until there actually is one.

(1) we don't believe a word you say

(2) we are not going to buy into the non-existent 'recovery'

(3) all the lies, swindles and data manipulation to make it appear as though there is a 'recovery' are not going to work, at least not on us.

so save the lies and misinformation/disinformation for another time, shill.

Aug 22, 2013 2:28PM
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Yes the country has finally cheap skated themselves into paupers. The author cited lagging sales at Wal-Mart as though that were something to be concerned about. Idiots don't even realize that buying cheap foreign made goods from Wal-Mart is a very large part of the problem with the U.S. economy. That and the fact that the big wigs sent all the manufacturing jobs to China too. You dummies just kept voting for the same sellout politicians that paved the way for the tax codes to be stacked against the working classes,and the jobs to be sent out of country. So what are you gonna buy Chinese goods with? If you have no jobs then you have no money for extras like cheap Chinese junk. The truth is that the U.S.A. has been sold out for the interests of everyone but the people who live here.

Aug 22, 2013 3:27PM
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Wages have stagnated for years, while inflation has risen. Wall Street continues with record numbers while the economy continues its relentless death spiral. The rich get richer, while poverty increased to 13% of our population last year. One out of seven are relying on food stamps to eat. The country has assumed third-world status in most important categories. Politicians who are bought & paid for by corporations act like puppets, putting on a political show that is designed to separate and divide our population, while accomplishing nothing. People bicker over entitlements and taxes, while most major corporations have orchestrated ways to avoid paying one dollar in US corporate income taxes. GREED & CORRUPTION bring every democracy to its knees eventually, and our turn has come. Anyone who believes that this is a Democrat/Republican issue is an idiot .... Politics is just a diversion my friends. The capitalist system has gone unchecked and the mutation of our once-prosperous society has made us all slaves of the banks and big business. There is NO TRUTH in government, and the lies are causing death and destruction for the masses. Why we feel poor despite the recovery, is because there hasn't been a recovery, and there isn't going to be one until there is some type of reform, and I'd start with campaign contributions, as if the middle class had enough money to buy a few politicians, maybe we would finally have a say in things.
Aug 22, 2013 1:38PM
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Maybe it's Obama's massive tax increases?   Or maybe employers cutting back wages and raises to pay for government regulations and Obamacare?   

Maybe it the lack of economic growth caused the Tax, Print, Borrow and Spend policies of the imbecile '57 states'?
Aug 22, 2013 4:17PM
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What do you mean "feeling poor", I have been poor ever since Obama has been in office and it is getting worse. Don't see any relief in site.....
Aug 22, 2013 6:00PM
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Keep mentioning "recovery" and "end of recession"... I still won't believe it. 

Hmm, pay CUT of 8% over last 2 years... CHECK

Higher gasoline prices, food prices and taxes... CHECK

Higher insurance, mortgage and utility prices... CHECK

Explain to me how my bills could go up 10% and my pay cut 8% that I'm "recovering"!

Aug 22, 2013 3:29PM
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RECOVERY?????? What damn recovery?????? The one where fewer people are working than ever since the depression thanks to the socialist policies and programs of the socialist, aka Democrat, party. Put everyone on food stamps, government health care, government jobs, government phones, government housing and then LOOK OUT ! ! ! !

 

Once everyone stupid enough to fall for this tripe signs up and votes them into power continuously to keep the freebies coming, look out for the hammer heading for your HEAD. Then comes the time to TAX everything heavily to pay for it all.

 

Most people here do not remember the 90% tax rates we used to have when the Socialists (Democrats) had enjoyed unbridled power for so many years. Their tax and spend label is fitting because it is accurate. What many do not realize is that the TAXING can come later when you simply print the money you need to dole out freebies now under the guise of fixing something.

 

If you think you are better off now than you were 5 years ago, run your budget numbers now and compare it to 5 years ago and tell me, are you really better off??? Really, who do they think they are kidding. What is this summer, the 5th recovery summer in a row and we are still headed down the toilet.

 

And now, we have the wet blanket known as Obamacare stopping employers from hiring full time workers, cutting current full time staff to part time and dropping coverage for as many as they can. Give us a break and go back on vacation until 2017. At least that way you can't screw us any further.

Aug 22, 2013 4:12PM
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As usual, this article doesn't tell the whole story.  What's left out is that incomes have dropped more over the last 4 years than they did during the actual recession.  Median household incomes dropped 1.8% during the Great Recession, and they've dropped 4.4% since the Great Recession officially ended. Essentially, everything that Bernanke and Obama have done over the last 4.5 years has failed miserably.   Here's the AP version of the story, a little more balanced....

"WASHINGTON (AP) - The average American household is earning less than when the Great Recession ended four years ago, according to a report released Wednesday.

U.S. median household income, once adjusted for inflation, has fallen 4.4 percent in that time, according to the report from Sentier Research. The report is based on an analysis of Census Bureau data.

The median, or midpoint, income in June 2013 was $52,098. That's down from $54,478 in June 2009, when the recession officially ended. And it's below the $55,480 that the median household took in when the recession began in December 2007.

The report says nearly every group is worse off than four years ago, except for those 65 to 74. Some groups have experienced larger-than-average declines, including blacks, young and upper-middle-aged people and the unemployed."

Aug 22, 2013 3:14PM
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I thought we had a "Recovery Summer" back in 2009.  Obama said so.
Aug 22, 2013 3:26PM
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I buy most of my clothes at Good Will on their half price day - the last Saturday of the month.  It doesn't hurt my ego one bit because it gives me a much larger wardrobe on a very small budget. 
Aug 22, 2013 3:25PM
Aug 22, 2013 5:44PM
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I can tell you this...I'm a Registered Nurse with 24 years of experience and can't get a job.  There are plenty of ads for nurses but the hospitals don't call.  They must want new cheaper nurses just out of school.  Nursing homes are not providing me work as well.  Too many people applying I guess.  I tried to get other jobs outside of my profession and never get calls for those.  Is it because I'm at the top of my game and too expensive?  Or, the fact that I'm in my 50's?  Hard to tell.  Could be because the government sponsored schools to teach a new breed of health worker called the medical assistant.  They taught these people Nurse skills and pay them a fraction of the wage.  I see that  they are now in demand. Thanks government for that one.  I will be on food stamps soon, I wish that dishwashing job I applied for will call.  I need something.  I'm going under.
Aug 22, 2013 4:56PM
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What recovery for every job opening here there are 500 applications.
Aug 22, 2013 2:22PM
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"Median annual household income was $52,100 in June, still than in December 2007, when the recession began, The New York Times reports, citing the study."

I think the math is not perfectly accurate in the calculation if they include people like me who is not able to get back to the job market due to sickness after laid off in 2009.  For the past 4 years I only have about $200/yr of interest income so it will skew the math.  I will need to recover my $110,000/yr income, but that is a dream I will never see again.  I would be lucky if I will get hire.
Aug 22, 2013 5:00PM
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how does a phoney economy create a real recovery?
Aug 22, 2013 5:02PM
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There hasn't and isn't a recovery.  Simple answer to the question why we still feel poor is because we are still poor if not poorer than we were a few years ago.   What recovery..

 

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