US household incomes rise for first time since 2007

Shoppers along Michigan Avenue in Chicago, Illinois, on July 29, 2016.
Shoppers along Michigan Avenue in Chicago, Illinois, on July 29, 2016.PHOTO: AFP

WASHINGTON (AFP) - Median household income in the United States rose last year for the first time in eight years, providing welcome relief for Americans struggling to make ends meet, US officials said on Tuesday (Sept 13).

The White House seized on the news, celebrating what it said was the fastest income growth recorded in nearly 50 years.

According to Commerce Department data released on Tuesday, real US median household income rose 5.2 per cent between 2014 and 2015 to US$56,516 (S$77,250).

The poverty rate fell 1.2 percentage points to 13.5 per cent, with 43.1 million Americans living in poverty, 3.5 million fewer than in 2014.

The figures marked the first annual increase in median household income since 2007, according to a statement from the Census Bureau, which is part of the Commerce Department.

With voters due to choose a new president in less than two months, the results quickly became the subject of electioneering.

Campaigning in Philadelphia for Democratic nominee Hillary Clinton, President Barack Obama said the news showed the country was on the right track.

"We lifted 3.5 million people out of poverty. That's the largest one-year drop in poverty since 1968," the US leader said, wryly taking a rhetorical bow. "Thanks, Obama."

The Census Bureau statement noted however that household incomes remained 1.6 per cent lower than in 2007, the year before the global financial crisis, and were 2.4 per cent lower than a peak in 1999.

While there was no significant improvement in US income inequality, the share of the public living without health insurance fell from 10.4 per cent to 9.1 per cent, or 29 million people, in 2015.

Despite the steady job growth produced by the US economy in recent months, some US policymakers have sounded a note of caution, citing slack in the labour markets and saying labour force participation remains 1-1.5 percentage points below the levels recorded before the global financial crisis of 2007-2008.

The US Federal Reserve refrained from raising rates this year out of fear of interrupting a comparatively weak economic recovery.

Members are due to convene next week to review interest rate policy. Hawkish and dovish members are divided over the timing of the next increase.

Still, Mr Jason Furman, chair of Obama's Council of Economic Advisers, said the news was unambiguously good, noting that the largest improvements had been experienced by African Americans, Hispanics and children.

In a statement issued by the White House, Mr Furman also said the pay gap between men and women working full-time shrank last year.

"The ratio of earnings for women working full-time, full-year to earnings for men working full-time, full-year increased to 80 per cent in 2015, the highest on record," Mr Furman said.