Three Economic Lessons From 2016 — And Three Questions For 2017

From FiveThirtyEight:

This is In Real Terms, a regular column analyzing the latest economic news. Comments? Criticisms? Ideas for future columns? Email me, or drop a note in the comments.

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The past year has taught some harsh lessons. Trust polls more than you trust the conventional wisdom, for example — but don’t trust the polls too much. Don’t overestimate how much Americans care about fact-checking, or underestimate how much they hate the news outlets that conduct it. And don’t ever forget how much Britons love to tell off continental Europe.

Compared to the tumult and upheaval that have dominated the political world this year, the U.S. economy in 2016 has been calm, even boring. Job growth held steady. Unemployment fell. Overall economic growth was, as ever, disappointing but not exactly weak. In other words, more of the same.

Still, look a bit closer and you’ll see that 2016 did teach some valuable lessons, while also leaving plenty of questions unanswered for 2017. Here are three of each.

The first several years of the economic recovery, which officially began in 2009, brought positive (though often unimpressive) economic growth, strong corporate profits and steady hiring. But they didn’t bring significant wage gains for most workers. From 2010 through 2014, average hourly earnings rose at a rate of only about 2 percent per year, before adjusting for inflation. Median household income, which plunged during the recession, didn’t rebound at all during the early years of the recovery.

Now, though, that is starting to change. Growth in hourly earnings accelerated in 2015 and 2016 compared to a year earlier, hitting 2.8 percent in October before dropping a bit in November. And data released in September showed that U.S. median household income jumped 5.2 percent in 2015, the best year on record. …

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