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Change in real family income of the middle fifth, actual and predicted, 2000–2018

Note: The figure shows the paths of income growth projected by a model based on the relationship between income growth and the unemployment rate from 1948 to 2010, using forecasted unemployment rates from the Congressional Budget Office and Moody's Analytics. Data are for money income.

Source: Authors' analysis of Current Population Survey Annual Social and Economic Supplement Historical Income Tables (Tables F-2, F-3, F-5), Congressional Budget Office (2012), and Moody's Analytics (2012)

Updated August 22, 2012

Documentation and methodology

Underlying data are from the Current Population Survey public data series on unemployment and from CPS Annual Social and Economic Supplement Historical Income Tables, Table F-2, “Share of Aggregate Income Received by Each Fifth and Top 5 Percent of All Families, All Races: 1947– 2010”; Table F-3, “Mean Income Received by Each Fifth and Top 5 Percent of Families, All Races: 1966 to 2010”; and Table F-5, “Race and Hispanic Origin of Householder—Families by Median and Mean Income.” Real family income is indexed such that 2000=100. The projections are based on a regression analysis, based roughly on Katz and Krueger (1999), that uses the annual change in inflation-adjusted income of families in the middle fifth of the money income distribution as the dependent variable and the level of unemployment as the independent variable. The projections then use the regression parameters to forecast annual changes in middle-fifth family income based on unemployment forecasts through 2018 that are made by the Congressional Budget Office and Moody’s Economy.com, a division of Moody’s Analytics.

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