Americans Are Getting Richer, Part II

By Dan Mitchell. Excerpt:

"Two years ago, I expressed guarded optimism about the economy and government policy.

…we don’t need perfect policy to get more prosperity. The economy simply needs “breathing room,” which will exist so long as politicians don’t get too crazy about over-taxing, over-spending, and over-regulating. After all, even small differences in annual economic growth compound into big changes in living standards.

I followed last year with my Sixteenth Theorem of Government, which said the same thing but hopefully in a more pithy and memorable way.

Today, I want to show that the economy actually is innovating faster than government is suffocating. I already did this in 2021, but let’s look at some new data.

We’ll start with this chart from Professor Chris Freiman of West Virginia University. As you can see, data from the St. Louis Federal Reserve shows that average inflation-adjusted income in the United States has been rising over time.

In other words, the hockey stick is still heading in the right direction.

Could income be growing faster? Of course. That’s why I’m always complaining about bad policies (punitive taxes, wasteful spending, excessive red tape, cronyism, protectionism, etc).

By the way, the above chart shows “median” income rather than “mean” income, which means the numbers are not influenced by very high incomes for a handful of rich people."