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Serving Northern St. Louis County, Minnesota

Media misinformation

The economy continues to outperform the media narrative


The major media in the U.S. are continuing to fail the public, and that failure is playing a major role in the current state of the presidential race. If polls can be believed, large majorities of the American public give President Biden poor marks for his handling of the economy, and inflation is the biggest factor in that view.
It’s no surprise, since the major media, from cable news to papers like the New York Times, have been relentless in their coverage of inflation. That’s appropriate, since inflation directly affects Americans in their everyday lives.
Yet, lost in that coverage is the kind of context that came out just this month from the non-partisan Congressional Budget Office, or CBO, which looked at what really matters, which is the growth of incomes versus the rise in prices. The cost of goods, of course, is only one part of the puzzle. The cost of a hamburger or a loaf of bread today is many multiples of what those same things cost in the 1950s, yet Americans spend a lot lower percentage of their incomes on basic goods today than they did back then— because average incomes in the country have risen even faster than prices over that period. The price of basic goods is largely irrelevant as long as families see their incomes rise even faster, since they’ll still end up with more money in their pockets at the end of the day.
The CBO, in their report, looked at the rate of inflation since 2019 (before the pandemic), and compared it to the average rate of income growth in the country. And to be sure that big wage gains at the top of the income scale didn’t tilt the numbers, they looked at incomes by quintile, so we could see how those in the bottom 20 percent were faring as well as those in the top 20 percent and those income groups in between.
The CBO looked at price increases based on the Consumer Price Index-Urban, or CPI-U, which includes everyone living in a town of 10,000 or more. That’s about 93 percent of the U.S. population.
The findings? For all income groups combined, the cost of the same basket of consumer goods and services, including housing costs, rose an average of 4.5 percent annually during that period. That ranged from 1.2 percent in 2020 to a high of 8.0 percent in 2022, followed by a drop to 4.1 percent in 2023.
Price increases varied somewhat by income level because the typical basket of goods and services varies somewhat by income. Prices for those in the lowest quintile rose the most, at an average of 4.7 percent annually over that same period, while prices for the top quintile rose by a somewhat slower 4.4 percent per year.
Yet incomes rose faster than that across the board, leaving the average American consumer better off financially than they were prior to the pandemic and under the previous administration.
And here is where the media’s misrepresentation of the situation has distorted the public’s view of our current economic circumstances. A number of recent surveys have consistently found that if you ask Americans about their personal financial circumstances, a sizable majority (around 60 percent) will say they are good to excellent. In other words, they are feeling the effects of a good economy, one in which their income growth is outpacing inflation.
But when asked about the economy in general, Americans have a much gloomier outlook. Yet, since most of us are only familiar with our own economic circumstances, we rely heavily on the portrayals of economic conditions that appear in the media.
And every time an inflation number comes out, it’s headline news, complete with the obligatory interview with a consumer or two bemoaning the price of gas or a dozen eggs (which incidentally have fallen back to roughly where they were before the pandemic), while the reporters never ask whether the consumer has seen their wages jump at work, which we know is happening because of the income data based on company payrolls.
Of course, it doesn’t make for such compelling reporting if your “man on the street” complaining about the price of burger just got a nice raise at work and can easily afford the price increase and still have more money left over.
By most economic measures, we’re experiencing one of the strongest economic periods in decades, and that’s why large majorities of Americans say they’re doing just fine. But when the media focuses relentlessly on negative economic news, without providing the kind of context that Americans need to truly understand the situation, we end up with a strong economy that has left most Americans feeling good about their personal finances, while thinking everyone else is struggling. It’s a false narrative and it’s a disservice to the country.