Number: RL33519
Title: Why Is Household Income Falling While GDP Is Rising?
Authors: Marc Labonte, Government and Finance Division 
Abstract: Some policymakers have marveled at the economy's recent strength, whereas others have criticized the meager fruits of this expansion. Which camp is right? The answer depends on which data are used. After recovering from a recession in 2001, economic output, as measured by gross domestic product (GDP), grew at a rapid pace of 3.5% per year between 2003 and 2005. But household income, whether determined by a mean (average) or median (sample midpoint) measurement, fell from 2000 to 2004 in real (inflation-adjusted) terms. It rose about 1% in 2005, but remains below 2000 levels. Mean income fell from $64,767 per household in 2000 to $63,344 in 2005, and median income fell from $47,599 per household in 2000 to $46,326 in 2005. This report seeks to account for some of the leading causes of the divergence.
Pages: 11
Date: August 30, 2006