The Washington Post‘s Wonkblog has a hopeful headline (5/28/13):
The Economy Is Holding Up
Surprisingly Well
in a Year of Austerity
And a version of this piece landed on the front page of the Post‘s print edition, under the headline “Economy Shows Some Endurance.”
And here’s the good news in a nutshell:
Americans with higher incomes are wealthier thanks to the stock market’s 16 percent rise so far in 2013. Middle-income earners, whose assets are disproportionately tied up in their homes, are becoming wealthier thanks to higher housing prices–up 10.2 percent in 20 major cities in the year that ended in March, according to the S&P/Case-Shiller home price index released Tuesday.
And lower- and middle-income consumers have benefited from falling gasoline prices.
Hmm. You may notice, just looking at this, that the benefits for “middle-income earners” and “lower- and middle-income consumers” are also going to “Americans with higher incomes.” After all, the wealthy also live in homes and buy gas (or have their chauffeurs buy it for them). So the implications that the benefits of the economy are being distributed across the board is, on the face of it, dubious.
When you look into the numbers, it looks more dubious still. The average U.S. household spends about 4 percent of its gross income on gasoline–so you’d need a pretty dramatic change in gas prices to have an appreciable impact on a typical family’s finances. In fact, they’re down roughly 15 percent from their peak earlier this year, but they’re still about 15 percent more than the low they hit around this time last year–and if you look at gas prices over the past couple of years, they’ve bounced up and down without really going anywhere.
As gas prices are only one component of a household budget, you can get a better sense of how prices are affecting consumers by looking at overall inflation–and there you see that prices are generally pretty stable. Which is good news, but not really comparable to having your stock portfolio go up by 16 percent over five months.
But expenses, of course, is only half of a household’s budget–the other half being income. And that half, for the working class, is holding up unsurprisingly poorly in a year of austerity: According to the Bureau of Labor Statistics, the average weekly U.S. wage decreased by 1.1 percent over the most recent annual period. (That’s not adjusted for inflation, so the real decline in spending power is slightly greater.)
So, a more realistic view of the U.S. economy would be: If you own stocks, stock prices are going up. If you own a home, home prices are going up. And if you work for a living, wages are going down. Maybe that deserves a different headline.
Doug Latimer
Look on the bright side
Belt tightening makes you look slimmer!
Padremellyrn
The Mini true has just released the findings on the sixth quarter of it’s ninth, three year plan, and it will be necessary to rectify the statement that was predicting the increase of the proles wages, down grading it to warning that wages will possible be lost.
times 19.12.83 forecasts 3 yp 4th quarter 83 misprints verify current issue
times 14.2.84 miniplenty malquoted chocolate rectify
Or again, The Times of the nineteenth of December had published the official forecasts of the output of various classes of consumption goods in the fourth quarter of 1983, which was also the sixth quarter of the Ninth Three-Year Plan. Today’s issue contained a statement of the actual output, from which it appeared that the forecasts were in every instance grossly wrong. Winston’s job was to rectify the original figures by making them agree with the later ones. As for the third message, it referred to a very simple error which could be set right in a couple of minutes. As short a time ago as February, the Ministry of Plenty had issued a promise (a ‘categorical pledge’ were the official words) that there would be no reduction of the chocolate ration during 1984. Actually, as Winston was aware, the chocolate ration was to be reduced from thirty grammes to twenty at the end of the present week. All that was needed was to substitute for the original promise a warning that it would probably be necessary to reduce the ration at some time in April.
Mary-Alice Shemo
It only looks good because of the warped way we measure our economy. Clean-up costs from superstorms like Hurricane Sandy & the recent tornado in Oklahoma show up on the GNP as a good thing.
If someone has huge medical bills that eat up their savings & knock them into poverty, that’s a positive on the GNP. Other approaches have been proposed that separate spending into productive & unproductive expenditures. These need to be part of our economic measures.
Kevin Bradshaw
Dean Baker also tore this article apart:
http://www.cepr.net/index.php/blogs/beat-the-press/yet-more-bipolar-economic-reporting-from-the-post
Padremellyrn
@mary – Jim Hightower used to say “we need have a “Doug Jones Average” that measures the important things for the “Doug 6 pack boys” and the rest of america, instead of the nonsense of the Dow Jones, which really has no meaning in the real world.
michael e
Sweet Jesus FAIR almost got it right for once.But you missed one important factor.Whether rich or poor……the up tic in so called wealth is not based on anything tangible.It is all based on the whims of the market.Like betting your life on a game of craps.And why is the market and housing and all the rest of this crap up?Because the Japanese picked up buying our dept when the Chinese bumped us.Because we are spending,borrowing,and printing faster and faster as if the bill wont come due.How stupid can we be?WE do have this massive ocean of energy(yes Sarah Palin you were right) but even that could be frittered away by this lot of morons.Mitt Romney and Paul Ryan would by this point have us pointed in the right fiscal direction. But we still have tweetle dee and tweedle dumb.So…………
Andre Guimond
@Michael E: Of course the growth of housing and stock market wealth is not based on anything tangible – from a certain perspective. It’s quite “tangible”, for instance, when the stocks respond positively to news about slashing health care, food stamps, education, senior’s programs, after-school programs, and so on. And it’s “tangible” actions undertaken by banks to hold back foreclosed housing stock that makes housing prices spike. But yeah, you’re right, the stock markets and housing markets have very little to do with the real productive economy – or the well-being of the general population, if that matters at all.
There’s a clear message in such reporting, though: making wealthy people happy is fantastic and should be celebrated – and we might be able to spare some bread crumbs for the poor, like barely changing gas prices, in the midst of our jubilation. That’s the “free market” for you. Romney and Ryan likely would have done worse, but not much.
michael e
Andre your missing the point.When you so inhibit a truly free market economy you automatically make wealth …phony wealth.Intangible.Mitt and Ryan would of released the taps that recreate wealth.Real wealth.See the libs have a seminal problem.They have no idea how to make money.They in fact revile it.Yet at the same time…they want people to have money so they can take it.Like taxation of ciggies.Over tax them to put them out of business…while depending on them to float programs.It literally makes no sense.Look at oil development.Massive.Yet this president has fought it tooth and nail.He detests the whole industry.He hates our allies, and cow ties to our enemies.He is literally ass backwards on damn near everything.Obama care.Moving up on 3x the cost promised.Less coverage.More cost.less doctors.All the things we said would happen are.Look at all the scandals.A white house gone mad.And still you cant see that voting for him was the most f**ked up thing you could of ever done.Hopeless.What does this bunch have to do to show you the level of this disaster?