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Surging inflation gobbled up household income gains last year, making 2022 the third straight year in which Americans saw their living standards eroded by rising prices and pandemic disruptions.

Americans inflation-adjusted median household income fell to $74,580 in 2022, declining 2.3% from the 2021 estimate of $76,330, the Census Bureau said Tuesday. The amount has dropped 4.7% since its peak in 2019.

The figures add to the picture of the economic challenges facing households since Covid-19 hit in early 2020. Inflation hit a four decade high last summer as the pandemic upended supply chains and the Ukraine war drove up energy prices.

This year could be different. Earnings and inflation trends have improved as a strong labor market and cooling price increases boosted household purchasing power, said Bill Adams, chief economist at Comerica Bank.

Shifting into the present and into the future, the prospects are better for wages to make up for some of the ground lost during the last couple of years, Adams said.

Wage growth for the typical worker outstripped inflation starting in December 2022, with inflation-adjusted wages rising about 3% in July, according to data from the Atlanta Fed Wage Tracker and the Labor Department.

https://www.wsj.com/economy/u-s-incomes-fall-for-third-straight-year-7b8293c6?mod=djemRTE_h