New census data showing that median household income rose at a record rate last year caught most everyone by surprise, including economists. But the eye-popping numbers must have come as a shock to Donald Trump supporters who buy his contention that the economy is languishing under President Obama, and would continue to underperform if Hillary Clinton is elected president. In contrast to Trump’s bleak assessment of U.S. fiscal health, the figures released Tuesday by the Census Bureau offer a wide swath of evidence to suggest that the slow-simmering recovery from the Great Recession has at last reached middle- and lower-income Americans. The report also indicates that Obama’s efforts to boost the poorest Americans — including through earned-income and child tax credits — are beginning to pay dividends.
The 5.2 percent increase in median household income, to $56,500, marked the first real advance in eight years, and the biggest single-year jump since 1967, when the Census Bureau began keeping track of it — a showing mostly attributable to more people finding work. Significantly, there were gains across almost all age categories, demographic groups, and geographic regions (with rural areas being an exception). The advances were especially impressive for those on the lowest rungs of the economic ladder. Median income for households at the 10th percentile, for instance, increased by about 8 percent, compared with a 2.9 percent hike for those at the 90th percentile. That helped to lower the poverty rate to 13.5 percent, from 14.8 percent in 2014, a decrease of about 3.5 million people.
The question now is whether the household pay raises were an aberration, or the start of a prolonged period of growth. In the midst of the presidential campaign, some Republicans are arguing the former. To do otherwise would undercut their candidate's position — that the economy needs a drastic overhaul only he can pull off. The Census Bureau report, however, makes a robust case for staying the course. There are more than three months left before the 2016 ledger closes, but the job market has been strong, and the unemployment rate in August was unchanged at 4.9 percent. Even pay raises are starting to come back into fashion: wages went up by an average of 2 percent last year. "We don't think this is blip," said Nariman Behravesh, chief economist at IHS Inc., a Lexington-based forecasting firm. "We are projecting that median household income will continue to rise in the next few years."
It's going to take that kind of upward trajectory to fully repair the damage inflicted during the economic collapse. Despite last year's big jump, median household income is still 1.7 percent below its 2007 level, more than 43 million people are living below the poverty level, and income inequality persists. The next president must work in conjunction with the Federal Reserve, Congress, industry leaders, and others to sustain the momentum. It's clear that the economy is headed in the right direction. This is no time to put up a roadblock.