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Weekly Standard Online

Economic Data and the Election

There are times when inordinate importance is attached to a data release. Those are times to follow rules: averages can be deceiving: you can drown in a lake with an average depth of three feet; and disaggregate to get an understanding of the real-world significance of the data.

The data that have so thrilled the Democrats—Bill Clinton says they prove the economy works better when Democrats are in charge, and the Clinton team hail them as supporting their "narrative" as to what is going on in the economy—are for median household income adjusted for inflation ("real income" in economists' jargon, the measure referred to herein). That indicator, surely welcome, rose more than 5 percent in 2015. Democrats say this proves that President Obama's policies are working, and many pundits claim that that this single number will tip the scales in favor of Hillary Clinton.

Not likely. This average conceals several unpleasant facts that bear heavily on voters' decisions.

* Median real incomes, although higher in 2015 that they were in 2014, have not returned to pre-recession levels.

* Median real earnings of men are still lower than they were in the early 1970s. This key Trump constituency is unlikely to defect because average earnings rose in 2015; their grievance is with the long-term attrition in their earnings.

* Incomes of the bottom 95 percent of households remain below the levels of 2007, even though the lowest-paid workers did see gains in 2015. Reading that the average of all incomes has risen—because the average is pulled up by the few at the top—is as likely to confirm the view of the majority of voters that incumbents have not been attending to their interests as it is to persuade them that their prosperity is just around the corner.

* Median household incomes in 39 states remain below the levels of 2007.

It should come as no surprise that more voters think the economy is stagnating or is in recession than believe it is in recovery. The averages say they are wrong, but averages don't always tell the whole story, especially when we are hunting for clues as to how voters will cast their ballots. Who are you going to believe, the data or your lying eyes, to borrow from Groucho.

To the extent that this is "it's an economy, stupid" election, and that is not certain, the headline rise in real median incomes in 2015 does not provide the solace Democrats and their media commentators were hoping for. Despite the fact that the average gain is a lot better news than a decline would have been.