This fits what statisticians call a “power law” distribution, where exponential equations (hence “power”) deliver extremely unequal rewards. Averages mean little in a power law. Imagine if 100 people enter a lottery, and 90 people win nothing; five people win $10; four people win $100, and one person wins $1,000. The lottery awards $1,450 to 100 people. The average prize is $14.50. But that statistic is nearly meaningless. Ninety percent of the participants won nothing, and one person won 69 percent of the cash. In a normal distribution, “average” is a useful indicator. In a power-law distribution, “average” is misleading.

The U.S. economy’s power-law features, in which averages disguise massive inequalities in outcomes, go a long way in explaining how Obama can tell a story about the economy vastly different from the ones that are propelling some presidential candidates. A prime example is the pattern of income growth. Between 2009 and 2013, most measures of real personal income showed slow but steady improvement. Average hourly earnings for private sector workers grew about 7 percent. But what about the distribution? The top 1 percent saw its disposable income grow by 11 percent. Everybody else got close to nothing. For the bottom 99 percent, income actually declined through the first five years of the recovery. “So far all of the gains of the recovery have gone to the top 1 percent,” the economist Justin Wolfers wrote.

There are several contributors to this power-law dynamic in U.S. wage growth. One is that the top percentiles of earners include a large number of consistently employed executives, lawyers, doctors, financiers, and other highly educated workers whose work and compensation weren’t interrupted by dramatic swings within the labor force. Meanwhile the middle of the labor market has undergone painful technological and demographic shifts. Globalization and technology have "hollowed out" the middle class. Between 1979 and 2011, the income of the second and third quintiles of households grew less than one percent per year. The income of the top one percent grew five-times faster. The quality of many middle class jobs is also eroding. Research by the economists Lawrence Katz and Alan Krueger found that between 2005 and 2015, the number of workers in alternative arrangements without health insurance or paid leave—like home health aides, truck drivers, and call-center workers—grew 66 percent, while the number of standard full-time jobs actually declined a bit.

Another contributor to this power-law economy is that geographical opportunity has become even more spiky. Workers in rich cities earn much more than their counterparts in poorer parts of the country. It’s not just because the price levels of cities are higher. They’re also more productive. In 2001, the 50 richest metros produced 27 percent more per person than the national average. Today, they produce 34 percent more.