Census: US Income & Poverty Both Edged Up in 2023

U.S. inflation-adjusted household income increased but a measure of the poverty rate also edged up last year, the U.S. Census Bureau reported Tuesday, offering a snapshot of how American households fared as the economy returned to pre-coronavirus pandemic growth levels, job growth boomed and inflation eased.

Real median household income rose to $80,610 in 2023, up 4.0% from 2022. The report also showed a main gauge of the nation's poverty rate, adjusted for government support such as food assistance and tax credits, rose to 12.9% from 12.4% in 2022. The so-called official poverty rate, meanwhile, fell to 11.1% from 11.5%.

The income and poverty data for 2023 comes two months before the U.S. presidential election. The shadow cast by a surge in inflation following the onset of the pandemic in early 2020, and how much that has squeezed pocketbooks of voters once government support programs designed to shore up household incomes expired, remains a key issue.

Last year saw the economy continue to post stronger-than-expected growth as it returned to its pre-pandemic path while the unemployment rate by January 2023 was 3.4%, lower than just before the health shock struck. While it ticked up to 3.7% by last December, that was still the lowest level in more than 50 years.

Employment growth averaged around 250,000 new nonfarm payroll jobs a month over the course of 2023, well above the 183,000 average over the decade preceding the pandemic.

The worst inflation in more than 40 years, meanwhile, continued to vex both households and the U.S. Federal Reserve. The central bank ratcheted up interest rates to more than 5% by the middle of last year and has kept them there since, in a bid to reduce the pace of price increases back to the normal annualized trend of around 2%.

Inflation, by the central bank's preferred measure had fallen from a high of 7.1% on an annual basis in June 2022 to 5.5% at the beginning of 2023, before more than halving to 2.6% by last December. Inflation currently remains at 2.5%.