Household income remained stagnant in 2013, as the real median household income of $51,939 was essentially unchanged from its 2011 and 2012 levels. However, growth in the number of higher-income households may be a positive sign for the restaurant industry, according to the NRA’s Chief Economist Bruce Grindy. His Economist’s Notebook commentary and analysis appears regularly on Restaurant.org and Restaurant TrendMapper.
Household income remained stagnant in 2013, according to the latest figures from the U.S. Census Bureau. Real median household income was $51,939 in 2013, essentially unchanged from its 2011 and 2012 levels. In addition, 2013 median household income stood 8 percent below its recent cyclical high of $56,436 in 2007.
But looking inside the numbers, there are some positive signs for the restaurant industry, as the number of higher-income households rose for the second consecutive year. The number of households with annual income above $75,000 numbered 42.3 million in 2013 – up 3.7 percent from a total of 40.8 million in 2011. In other words, there were 1.5 million more households with income above $75,000 in 2013 than there were in 2011, after adjusting for inflation.
The growth of the last two years came on the heels of a sharp decline in higher-income households during the Great Recession. Between 2007 and 2011, the number of households with annual income above $75,000 plunged 5.1 percent, or 2.2 million households.
At the same time, the number of households with annual income below $25,000 soared 14 percent, or more than 3.7 million households. In addition, the number of households in the $25,000-to-$49,999 income category jumped 9 percent between 2007 and 2011.
As the economy improved during the last two years, the number of households with income below $25,000 remained steady, while households in the $25,000-to-$49,999 income bracket declined 1 percent. With growth being realized in the upper brackets, this suggests that households are moving up the income ladder as the recovery continues to firm.
While the recent growth is a move in the right direction, the number of higher-income households still remained 700,000 below the record high reached in 2007, when there were 43.0 million households with income above $75,000.
The potential implications for the restaurant industry are significant, as higher-income households represent the majority of spending in the industry. According to data from the Bureau of Labor Statistics, households with incomes of $100,000 or higher are responsible for 36 percent of the total spending on food away from home, while households with incomes between $70,000 and $99,999 account for 18 percent of industry spending.