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US Income Rises?

Yesterday the NY Times ran an article headlined, "Average U.S. Income Showed First Rise Over 2000".

The big claim is that after peaking in 2000, incomes fell, bottoming in 2003, and have now climbed back to make new highs in 2006.

The author examines IRS data showing average Adjusted Gross Income and Wages and Salaries as reported on US tax returns. The numbers quoted are a bit confusing – some are adjusted to 2006 dollars, some are totals and some are averages. But one thing is clear to me: stated in gold, Adjusted Gross Incomes in 2006 are down about 50% from their 2000 levels, about where they were in 1995. Wages and Salaries, stated in gold, are also down about 50% from their peak in 2000.

I'm not sure how useful this data is, as Adjusted Gross Income is merely a number used for calculating taxes, and is subject to all kinds of exclusions, deductions, and so on, that relate solely to the complexities of the tax code. I prefer to watch the Per Capita Disposable Income, a number reported monthly that shows on average, the money available after taxes for consumption, investing and saving. This number also fell about 50% from 2000 to 2006, and has continued to fall since then. It is currently about where it was in the late 1980s.

People do have more dollars to spend… but those dollars are worth much less. Don't be fooled! Make sure your income and net worth are rising when measured in gold.

AGI and Wages in gold grams