Annual U.S. inflation, 2006–2026, with 2016 highlighted. Bars below the line
are deflation. Source: BLS CPI-U.
2016 opened with the cheapest oil in more than a decade and closed with a
change in political direction. Crude fell to about $26 a barrel in February,
and gasoline averaged $2.14 a gallon for the year, its lowest annual
average since 2004. Headline inflation was 1.3%, a modest rebound from 2015’s
0.1%, though prices excluding food and energy rose faster, driven by rents and
health care.
Median household income rose to $59,039, the second large gain in a row, and
the median new home sold for about $307,800. The federal minimum wage held at
$7.25, and a first-class stamp fell to 47 cents after a January rate cut, a
rare decrease.
Two votes changed the outlook. Britain’s June decision to leave the European
Union unsettled currency markets, and the U.S. election in November raised
expectations of tax cuts, deficits, and faster growth, sending long-term
interest rates higher. OPEC’s November output cut ended the oil slump, and the
Federal Reserve made its second rate increase in December, to 0.50–0.75%.
What things cost in 2016
In 2016, the median household income was $59,039, and a gallon of gas cost $2.14.
Median household income
$59,039
Gas (per gallon)
$2.14
Median home price
$307,800
First-class stamp
$0.47
Federal minimum wage
$7.25
What $100 from 2016 was worth later
$100 from 2016 had the buying power of $138
by 2026; each milestone links to that conversion.
Consumer prices rise 1.3% as gasoline hits a decade-plus low.
Consumer prices rise 1.3% as gasoline hits a decade-plus low Oil bottomed near $26 a barrel in February, and gasoline averaged its lowest annual price since 2004. Prices excluding food and energy rose faster, about 2.2%, led by shelter and medical care.
Britain votes to leave the European Union on June 23 The Brexit referendum sent the pound to its lowest level in decades and drove investors into U.S. Treasury bonds, briefly pushing the ten-year yield to a record low in July.
Donald Trump wins the presidential election on November 8 Markets reacted to expectations of tax cuts and more federal spending. Long-term interest rates rose by roughly a percentage point between the election and year-end.
OPEC agrees its first output cut since 2008 The November 30 deal, later joined by Russia and other producers, cut production by about 1.8 million barrels a day and helped end the oil slump.
The Fed raises rates a second time in December On December 14 the policy rate moved to 0.50–0.75%, a year after the first hike, and officials projected three more increases in 2017.
Sources: U.S. Bureau of Labor Statistics, Consumer Price Index (CPI-U, U.S. city average); U.S. Census Bureau, Current Population Survey (income); U.S. Census Bureau, New Residential Sales (home price); U.S. Energy Information Administration (gasoline, crude oil); U.S. Department of Labor (minimum wage); USPS historical rates; Board of Governors of the Federal Reserve System, press releases.
Inflation figures: U.S. Bureau of Labor Statistics, CPI-U annual averages.
See the methodology.