Mike Shedlock

In The Morning After; Price Discovery is Zero; PUT on the Bond Market? Is Inflation Really Under 2%? I posted a chart with a caption of "wages" but the corresponding chart showed "income".

The post is now fixed, but newer data has come in, and Doug Short at Advisor Perspectives has updated charts that I would like to share.

click on any chart for a sharper image

From Median Household Income Growth: Deflating the American Dream, by Doug Short.

What is the single best indicator of the American Dream? Many would point to household income growth. My study of the Census Bureau's data shows a 600.7% growth in median household incomes from 1967 through 2012. The ride has been bumpy, but it equates to a 4.5% annualized growth rate. Sounds impressive, but if you adjust for inflation using the Census Bureau's method, that nominal 614.2% total growth shrinks to 18.8%, a "real" annualized growth rate of 0.39%.

But if we dig a bit deeper into the method of inflation adjustment, the American Dream looks more like an illusion, as in "money illusion".


Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
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