So here’s a big question – was 2016 a good year when you think about the U.S. economy? It was a pretty good year, but not a great one. The economy got off to a disappointingly slow start at the beginning of the year. And despite an impressive third-quarter performance, over the past year the economy has grown at a mediocre pace of about 1.7 percent. But the unemployment rate is down 4.6 percent, a 9-year low.
And the fraction of adults who are working or looking for work was steady, although it’s still lower than it has been over most of our recent history. Employers added 180,000 jobs a month so far this year – pretty good. Nearly all of them were in the private sector. Inflation is quiet. And wages, finally, are beginning to rise faster than prices.
We did just go through a presidential election where all kinds of people were talking about how bad the economy was, so it couldn’t have been all rosy, right? There are some blemishes. One big one is that the amount of stuff we get for each hour of work has been growing at a distressingly slow rate. Now, productivity growth is important. It’s the reason we have more goods and services than our grandparents did, even though we work fewer hours. And lousy productivity growth is a poor portent for future wages. Another thing is that there are still a huge number of people on the sidelines of the job market. 15 percent of the men between the ages of 25 and 54 aren’t working, and that has been rising over time.
But is it just certain parts of the American demographic? Is it just certain groups who are benefiting? That’s a persistent issue. The growth we’ve had has not been enjoyed evenly across the population. If you look at the incomes of people at the middle of the middle class, they’re rising, and they’re back to where they were before the Great Recession – about $58,000 a year. But adjusted for inflation, they’re still lower than they were back in 2000.
More young adults are living with their parents than at any time since 1940, apparently unwilling or unable to get out on their own. And these national averages always obscure the places that are really doing bad. In El Centro, Calif, the unemployment rate is 22 percent. And in Yuma, Ariz., it’s 19 percent – just unbelievable and distressingly poor.
All-in-all, it’s been a tumultuous year, but we’re optimistic. There’s potential for growth, and with our economy’s past, I’m personally grateful for that much.