The census recently released data on median household income in 2021 (link downloads the excel file). For all families, it is $88,590. Not bad! Below I plot median household income in 2021 dollars from 1950 - 2021

Inflation adjusted median household income has gone up quite a lot, doubling since the mid 1950s. That’s pretty good!

But at the same time, it looks like we have three lost decades, the 1980s, 1990s, and 2000s. Let’s look at the trends from median household income growth from three eras: 1950-1980, 1980-2010, and 2010-2021

If median household income had not stalled out in the early 1980s and continued on its 1950-1980 trend, we’d expect median household income to be around $120,000 today, not ~ $88,000.

The recent uptick of median household income growth beginning a bit after the Great Recession has gotten us slightly back on track to earlier times. But there hasn’t really been much time to catch up. If we stayed on the 1980-2010 stagnation route, we’d expect median household income to be around $86,000 instead of $88,000. A meaningful difference, but not totally earth shattering.

It’s a little easier to see the gap that the 3-decade stagnation produced if we fill in the space between trend and observed lines.

The last decade of revamped median household income growth has made up a lot of lost ground! But we’re still very much in the hole. So I guess how you feel about the recent trends reflect: 1] how much you focus on historical trends and counterfactuals 2] how much you privilege absolute changes 3] how confident you are that the trends from the last decade will continue into the future.

PS — Obviously projecting 1950-1980 growth into the next four decades is silly science fiction. The world is too complex and too many local, national, and global factors produced the stagnation. But it’s useful to think about, in my opinion.