Median Household Income Has Declined Over Decade

Median household income is 7.3% lower than in was in 2007 at the start of the Great Recession and it is 8.4% lower than it was in 2000.  This is in sharp contrast with median household income growth per decade since the end of WW ll.  Median household income growth averaged 11% per decade prior to 2000.  Curiously, corporate profits have grown rapidly since the end of the recession.  Their profits have grown faster in international markets than they have in the US.  Globalization has been good for many multinational corporations but it has not been good for wages in most industrialized nations.  Much of the growth in income has gone to households which benefit from the growth in corporate income.  That is why income inequality has been increasing since 2000.

Declining household income is not good for households during a period in which healthcare costs and the cost of higher education has been growing rapidly.  It also explains why aggregate demand has been weak.  Households have less income to spend and they can no longer compensate for declining income by borrowing.  Globalization, however has made domestic demand less important for growth in profits.  The growth opportunities have moved to emerging markets for multinational corporations.