Predicting the 2023 Census Median Household Income Estimate

The validity of the Motio Research median household income series derives from its strong correlation with the U.S. Census median household income series. Additionally, being more timely than the Census series, the Motio estimates can be used to predict the Census annual estimates months ahead.

The U.S. Census publishes household income estimates for each calendar year in September of the following year (e.g., the estimates for 2023 are expected to be published in September 2024). The Motio household income estimates refer to past 12-month income for household groups with different tenure in the survey (as described in the documentation, here). Therefore, estimates within the first quarter are good candidates to approximate the official annual estimates.

The Motio March estimates, available by mid-April, offer the best approximation of the Census estimates. This series is the best option in terms of (1) covered period; (2) highest correlation among the three first-quarter estimates; and (3) the fact that most of the survey for the Census estimates, the CPS’s Annual Social and Economic Supplement (CPS ASEC), is conducted in March.

The chart below shows the Motio March median household estimates and the annual median household estimates published by the Census. The close relationship between the Motio and Census median household income series demonstrates the validity of the Motio household income estimates as reliable monthly indicators of the economic well-being of U.S. households. It’s worth noting that the largest discrepancy occurred during the historically high inflation of 2022.

The 2023 value for the Census series is our prediction of the value to be published in September 2024. We project the Census nominal median household income to have increased by 6.7% in 2023, from $74,580 in 2022 to $79,547 in 2023, with a lower bound of $78,115 and an upper bound of $80,978.

The forecast of the Census nominal value entails a projected increase of 2.6% in the Census real median household income, from $77,510 in 2022 to $79,547 in 2023 (in 2023 dollars, using the Chained Consumer Price Index). The chart below shows the Census real median household income data, including our projected 2023 value. This would be the first increase in U.S. real median household income after three consecutive declines from 2020 to 2022. The expected 2023 value will be slightly above the value observed in 2020.

In summary, there’s a very strong correlation between the Motio and Census median household income series, which clearly allows for an empirically grounded projection of the Census 2023 values, expected to be published in September of this year.