Advancing a Free Society

Trends in American Income Inequality Prior to the Recession

Sunday, April 18, 2010

While median family income in the United States fell for over a decade prior to the beginning of the recession that started in late 2007, per capita incomes continued to grow during that time period. From 2000 to the beginning of 2008, American per capita GDP, after adjustment for inflation, grew at a decent pace at about 1 ½ percent per year. Per capita real consumption of both durables and non-durables, an important measure of the real incomes of individuals, also grew at a good rate until the recession. These measures suggest sizable improvements in the welfare of the average person during most of this decade, yet the median household income cited by Posner suggests the opposite. How can these conflicting conclusions be reconciled?

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