In part.

We are comparing the median household here – so in both cases we have an employed household sitting dead in the middle of everyone.  The high unemployment rate would have some downward pressure on the wages, interest, and dividend/rental income this household receives – but the bias isn’t as strong as if we were to use averages and tear off the top of the income distribution.

Ultimately, once we are back to “normal” economic times the median household in the US should be substantially better off – the key thing I like to take out of this is just how relatively well New Zealand is doing at current times … and how weird it is that so many people want us to change the institutions that have served us so well during a massive global crisis.

Definitely, you are completely right – the current exchange rate doesn’t reflect the true difference in the price of goods between the two economies, and so doesn’t give a fair reflection of the real income gap.

However, PPP estimates are pretty unreliable and are often based on a fairly antiquated “basket of goods”.  Furthermore, using a typical exchange rate makes the idea that “we are increasingly able to buy more goods on international markets relative to other countries” clearer.  As a result I’m pretty comfortable just using market exchange rates in the throw away bit at the end of the piece 😉