Median Incomes Rose by 5.2% in 2015, Like Harambe Won Baby Sitter of the Year Award

This is truly a must read for those of you who believed median incomes gained 5.2% in 2015.

David Stockman breaks it down like no one else, exposing the lies issued by the census bureau and suggesting it was timed to benefit Hillary Clinton in the 2016 elections.

But even the 2015 numbers make no sense in their own right. Start with the Census Bureau’s “money income” data which is the basis for its claim that the median household income leapt higher last year by the greatest amount ever recorded. Hidden in its presentation of “real” dollars is the assumption that aggregate money income for all 125.8 million US households rose by 5.7% in nominal terms last year.

But how was that possible when nominal GDP increased by only 3.0% during 2015? Likewise, disposable personal income—again in nominal terms—-grew by just 3.7%.

The fact is, the median income can grow nearly twice as fast as aggregate income only if gains in the middle and bottom of the income ladder grew far faster than the total income pie. And that includes the big bucks earned by bankers, athletes, lawyers, business executives and the rest of the white collar elites.

To the contrary, the Census Bureau’s own report shows that the median nominal earnings of full-time male workers in 2015 grew by 1.6% and for full-time female workers by 2.8%. That hardly squares with 5.7% average aggregate growth of incomes for all workers—unless main street households was suddenly showered with windfalls from stock dividends they don’t own, bank accounts that pay no interest or rental incomes from properties registered in someone else’s name.

Even when you allow for gains in the number of workers employed in 2015 over prior year, which was about 2%, it still doesn’t add up. The total wage bill for all workers grew by just 4.2% in nominal terms during 2015. That’s by the Census Bureau’s own reckoning (table A-4), and that’s also before inflation!

Then again, when we look at the deflator used in the report—-even more red flags arise. To wit, according to the BLS’ CPI-U-RS, the cost of living in main street America, where presumably the median household resides, only increased by 0.1% last year.

That’s right. The report claims that the inflation index only rose from 347.8 to 348.2 during the entire year. Never mind that medical costs were up by 3.6%, housing rents by 3.5% and food by 1.4%. Allegedly, falling oil prices off-set all of that—-even though energy accounts for less than 9% of the CPI.

All of this suggests that there must be something in the footnotes hinting that the Census Bureau might have moved the goal posts, and indeed that is exactly the case.

Starting in 2013 with a partial phase-in, which was fully implemented in 2014, Census changed the questions and the methods it uses in calculating the “money incomes” of households. During 2014, for example, it started to “collect the value of assets that generate income if the respondent is unsure of the income generated.”

It also helpfully filled in the questionnaire where respondents answered with “don’t know” or where they “refused” to answer with its own quesstimates about what the answer should have been!

For instance, as a result of this “improved reporting” of interest income, the number of recipients increased by 41.6% and the aggregate amount of interest collected soared by 111.7%, according to John Williams at Shadow Statistics.

That’s right. During the entire course of 2015 the Fed kept savers lashed to the zero bound, but interest income surged by triple digits.

Even more preposterously, according to Williams its new counting methods “upped the number of recipients of money from IRA, Keogh and 401k withdrawals by 419.5%, increasing aggregate income in that area by 230.1%”

Needless to say, raiding your retirement fund is not “income” in the first place; it’s a liquidation of assets that were earned and counted in earlier periods.

All this blatant fiddling, of course, was described in purely clinical terms:

“The data for 2013 and beyond reflect the implementation of the redesigned income questions.”
When you look at the broken trend after 2014, however, it all begins to make sense. That is, the Census Bureau fudged the report just in time for the 2016 elections. Otherwise, how do you explain the chart below?

How did the 2.4% growth trend for money incomes between the 2008 pre-recession peak and 2014 suddenly rear up on its hind-legs and leap upwards by 5.7%?

In short, there is nothing which can explain last week’s phony headline gains except election year manipulation and spin. In fact, on a weighted basis for the mix of full-time male and female workers, the median after-inflation wage rose by just 2.01% during 2015. So plain and simply, there is no way that the median household could have gained 5.2%.

Maybe Washpo will publish a correction? Meh, doubtful.