Data out yesterday on the US economy was good, surprisingly good, and may just take the wind out of the Donald Trump’s sails – except of course little things like the truth seems to count for very little, these days.
US household income grew by 5.2% in 2015 – according to data published yesterday. It was one of the highest rises in income seen since 1967, at least we think that is so, data only goes back to 1967, so it may even have been the best year for even longer.
It is a truth that people don’t like to acknowledge, that individuals – seeing what’s in front of their eyes – can miss the big picture. To many Americans, the data may not feel right, but it is.
Donald Trump has repeatedly talked about the stagnation of US income, but it is much harder to make that claim now – although, when it comes to the court of public opinion, little things like facts count for very little. Besides we live in an age when we are told to ignore experts – and statistics are put together by experts.
But there is still a problem with inequality – median income was 1.6 per cent lower than in 2007. Mean income, which takes no account of distributional effects may be rising, but not income for the average person. To understand the difference between mean and median, consider two samples of three people. In one sample, one person is six foot one, another six foot and the third five foot eleven. In this sample, both the mean and median is six foot. In the second sample, one person is seven foot, one person is five foot seven and the other is five foot five. The mean is still six foot, the median is five-foot six.
If you allow for inflation, then the median income in the US is still 2.4 per cent lower than the late 1990s.
In short, the data for 2015 was promising but inequality is still a problem. Then again, the stats don’t tell the full story – they don’t tell us how income is distributed after tax, and they don’t tell us how people on lower income levels may have benefited from healthcare care reforms such as Obamacare.