Sorry, should have been more precise: “Besides high inflation…” Sorry, I sometimes skip stating priors. Bad habit
Start with nominal income, YoY. Personal income is before-tax, disposable personal income is after-tax
https://fred.stlouisfed.org/graph/fredgraph.png?g=195kL
Nominal incomes were up 2.3% in 2022, but after tax incomes were down 0.3%. Wage inflation had pushed people into higher tax brackets, and the standard deduction covered a smaller portion. That did not get corrected until Jan 2023, when brackets and deductions all went up over 7%. So the big takeaway is that nominal wage gains in 2022 were all eaten up by higher taxes, and that’s before we layer in inflation.
Now, lets layer in inflation:
https://fred.stlouisfed.org/graph/fredgraph.png?g=195ll
But now let’s add in H1 2023. First, nominal
https://fred.stlouisfed.org/graph/fredgraph.png?g=195mP
With the lowered effective tax rate, we see a much bigger gain in after-tax income, up 8.1% YoY in H1 2023. Now layer in inflation, much reduced from 2022:
https://fred.stlouisfed.org/graph/fredgraph.png?g=195mw
Things look much brighter with less inflation, and brackets/deductions that caught up with inflation
Keep in mind these data are from BEA’s monthly personal income tables. The article is from a separate Census Bureau survey, that tells largely the same story with different numbers