Household incomes rose last year for the first time since 2019 but are still lower than they were before the pandemic, according to a new U.S. Census Bureau report that helps explain why so many Americans remain dissatisfied with the economy despite strong growth.
There were also worsening disparities across racial and gender lines: White households saw a 5.4 percent increase in income, while median incomes for their Black, Asian and Hispanic counterparts remained largely flat. Meanwhile, the pay gap between women and men widened in 2023, with women making just 83 cents for every $1 paid to men.
“The good news is there’s been a 4 percent rise in income,” said Kristin Seefeldt, an associate professor at the University of Michigan whose work focuses on poverty and public policy. “But it’s also true that families are facing financial challenges. Rent has gone up so much. Groceries are more expensive. The price at the pump is higher.”
Inflation, which peaked at 9.1 percent in June 2022, has come down dramatically since then, as the Federal Reserve has taken steps to slow the economy. Overall, prices are 2.9 percent higher than they were a year ago, although many essentials — including housing, food and utilities — cost significantly more than they did a few years ago.
Even so, the U.S. economy has remained surprisingly resilient, notching quarter after quarter of growth and adding thousands of new jobs each month. The unemployment rate, at 4.2 percent, remains close to historical lows, and Americans are continuing to get pay raises, which is helping drive continued consumer spending.
“The bottom line is: This was a strong economic year,” said Arloc Sherman, vice president for data analysis and research at the Center on Budget and Policy Priorities (CBPP), a nonpartisan think tank. “We saw workers making gains and employment rising about as fast as it has any time in the last 30 years. This is the clearest evidence yet that incomes grew faster than inflation did for ordinary households.”
The White House welcomed the upbeat news on income ahead of the election. Despite large economic gains and job growth, the administration has struggled to persuade Americans that they’re better off financially than they were four years ago. For many people in the United States, the economy and inflation in particular remain top concerns in the presidential race.
“These results show that easing inflation and strong income growth lifted real incomes across the board last year, and especially so for lower-income households,” said Jared Bernstein, chair of the president’s Council of Economic Advisers. “They also show how much policy matters. The [Affordable Care Act’s] fingerprints are all over the historically low uninsured rates, and the ... poverty results underscore how important it is for Congress to work with us on attacking the affordable-housing shortage.”
Still, the census report offered a mixed picture of how families are faring. The share of Americans with health insurance last year — 92 percent — remained steady from the year before. But the poverty rate, adjusted to include government aid programs for the poor, rose to 12.9 percent from 12.4 percent in 2022. Child poverty also increased, to 13.7 from 12.4 percent a year earlier.
The official poverty rate, however, fell 0.4 percentage points, to 11.1 percent, though economists said it was not immediately clear what accounted for the discrepancy. “The poverty story this year is a little complicated. We are still trying to puzzle through what’s driving what,” said Sherman of the CBPP.
Jeff Stein contributed to this report.
