Household Incomes Fall, Cable TV Sees Fallout

Like “stagflation” in the 1970s, we may need a new word to describe the current state of the economy: “decovery.” At least, that’s how it looks from the perspective of household income, the main measure of prosperity and key determinant of consumption patterns. According to two former U.S. Census Bureau officials, household incomes fell further than previously suspected, continuing after the recession supposedly ended.

During the recession, which technically began in December 2007 and ended in June 2009, U.S. median household income fell 3.2%, according to Sentier Research. Bad news but hardly surprising, given the circumstances.

More unexpected was Sentier’s finding that between June 2007 and June 2011 U.S. median household income fell a further 6.7%; in other words, the post-recession “recovery” saw median household incomes fall twice as much as during the recession itself.

According to separate U.S. Census Bureau data, median household income fell from a peak of $50,303 in 2008 to $49,445 in 2010 (not adjusted for inflation). This bucks the general trend of previous economic recessions and recoveries. Per the U.S. Census, median household incomes increased steadily year over year through previous recessions, including 1980-1982, 1990-1991, and 2001-2002 (again, not adjusted for inflation). 



While grim, the Sentier findings confirm that the economic downturn has been broader, deeper and longer-lasting than previously believed, with Sentier co-author Gordon W. Green Jr. calling it “a significant reduction in the American standard of living.” The lingering effects of the recession and “decovery” are easy to spot in weak consumer confidence and changing consumer spending patterns, many of which overlap with their media consumption behaviors.

One example is the trend of “cord-cutting,” as overtaxed consumers consider ditching pay TV subscriptions to save money. While the trend has been small and inconsistent, it appears to be growing. After increasing 2% in 2008, the overall number of U.S. households subscribing to cable began dropping in the second quarter of 2010, according to SNL Kagan, which said 216,000 households dropped their subscriptions, followed by another 119,000 in the third quarter.

The numbers turned around in the fourth quarter, when the industry added around 250,000 new subscribers, followed by another 475,000 in the first quarter of 2011 -- but losses resumed in the second quarter of 2011 with 193,000 subscribers ditching pay TV services, according to figures compiled by Broadcast Engineering and GigaOM.

A recent survey by OMD found that 7% of respondents said they’ve already cut their pay TV subscriptions (including cable and satellite) while another 17% said they'd be willing to do so. 

Separately, Pew found substantial changes in which items Americans considered “essentials” versus “luxuries” in the aftermath of the recession. For example, while over 60% considered a TV set an “essential” in 2006, by 2009 that figure had fallen to around 50%; similar changes were seen with some non-media appliances including microwaves, clothes dryers and home air conditioning.

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