Trump’s Middle-Class Economic Progress

COMMENTARY Markets and Finance

Trump’s Middle-Class Economic Progress

Oct 16th, 2019 2 min read
COMMENTARY BY
Stephen Moore

Distinguished Visiting Fellow

Stephen Moore is the Distinguished Visiting Fellow for Project for Economic Growth at The Heritage Foundation.
For now the median family enjoys its fattest paychecks ever. SAUL LOEB / Contributor / Getty Images

Key Takeaways

Real median household income—the amount earned by those in the very middle—hit $65,084 (in 2019 dollars) for the 12 months ending in July.

A warning: A protracted economic slowdown or recession could reverse Mr. Trump’s advances on jobs and incomes.

The middle class not only isn’t shrinking, it’s getting richer.

President Trump’s critics can’t deny that the economy is doing well, so instead they insist all the benefits have gone to the rich and large corporations. “America’s middle class is under attack,” Sen. Elizabeth Warren asserted in her presidential campaign announcement last December.

The latest data from the Census Bureau monthly surveys tell a different story. Real median household income—the amount earned by those in the very middle—hit $65,084 (in 2019 dollars) for the 12 months ending in July. That’s the highest level ever and a gain of $4,144, or 6.8%, since Mr. Trump took office. By comparison, during 7½ years under President Obama—starting from the end of the recession in June 2009 through January 2017—the median household income rose by only about $1,000.

These statistics were published by two former census income-research specialists with 50 years experience who now run Sentier Research, a nonpartisan research group. Sentier analyzes the Census Bureau’s monthly Current Population Survey to calculate the most up-to-date changes in median household income, which it publishes six months to a year ahead of the official annual numbers. Sentier’s advance estimates are imperfect and sure to be revised, but generally have been a reliable leading indicator. (The big rise Sentier reports doesn’t account for the effect of the 2017 tax cuts, which saved the average household $1,400 in 2018, according to my colleagues at the Heritage Foundation’s Center for Data Analysis. For married couples with two children, the figure was more than $2,900.)

Sentier’s data squares with other economic trends. It explains why consumer spending has surged this year and major retailers like Lowe’s and Target report massive sales. White House economic adviser Larry Kudlow had it right when he said last month that, due to fatter paychecks, families are spending and saving more at the same time.

Sentier’s income data dates to 2000 and tells the story of the past two decades. The recession of 2008-09 crushed middle-class incomes so dramatically that the median income when Mr. Obama left office was no higher than it was when George W. Bush arrived. That was the middle-class and blue-collar squeeze Donald Trump tapped into.

Mr. Obama inherited a financial mess, but the median income continued its decline during almost all of his first term and rose only slowly in his second term—the weakest recovery from a recession since the 1930s. “We never saw a recovery where incomes took such a long time to recover the lost ground,” says Sentier founder Gordon Green.

Now a warning: A protracted economic slowdown or recession could reverse Mr. Trump’s advances on jobs and incomes. The trade war is imposing a heavy toll. But for now the median family enjoys its fattest paychecks ever. The middle class not only isn’t shrinking, it’s getting richer.

This piece originally appeared in The Wall Street Journal on 9/29/19

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