Though household income has been falling ever since the recession ended, there’s even more bad news in sight for working families: they shouldn’t expect any increases in their income beyond inflation for at least another decade. According to the Wall Street Journal, “economists expect inflation-adjusted incomes to rise over the next decade, but the 5% projected gain isn’t enough to reach prerecession levels.”
It won’t be until 2021 that incomes will get back to where they were when the recession ended, finally making back some of the losses that families have seen during and after the recession. Julia Coronado, an economist quoted in the article bleakly explains that this means that “standards of living in the U.S. will continue to decline as we deleverage and emerging markets take over as the growth engine of the global economy.” Basically, because American households are still busy paying off their debts, there just isn’t enough room in the economy to invest in continued growth.
This is terrible news for American families: though the poverty rate is exploding, increasing incomes aren’t going to be able to compensate for these losses anytime soon. The government isn’t going to be much help as budget cuts likely mean that income supplements are going to be cut, blowing another hole in many households’ income. And because of GOP procedural maneuvers, it looks like the Senate might never pass any bill that will help create jobs for those who have been left unemployed.
Hopefully this news will spur some kind of action among those who have the power to influence the economy, be it Congress or the Fed. The jobs crisis and the stagnant economy are now not merely today’s problems, but will affect families’ income for years to come. This further underscores the importance of acting on the economy today, as it could help make up some of the lost income that families are beginning to see.
Photo credit: Aaaarrrrgggghhhh!'s Flickr stream.
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