Editore"s Note
Tilting at Windmills

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December 21, 2007
By: Kevin Drum

ECONOMIC NEWS....I'm asking this completely without snark: Is there any reason at all for a reporter to write a paragraph like this?

Incomes also rose in November, by 0.4 percent, double the rate of increase in October, although that was more than offset by increased prices, the department reported. Discounting for inflation, disposable personal income — the money left to spend after taxes — fell 0.3 percent.

What possible excuse can there be for leaving the initial impression that incomes rose in November? Real income is the only income that matters, and real income was down. That's the number that should get the attention.

And while we're at it, that 1.1% increase in consumer spending that's in the first paragraph of the story? Also not adjusted for inflation. The real number is 0.5%.

And the primary driver of that 0.5% increase in consumer spending? Since incomes were down I suppose you can guess the answer, but you have to plow through to the tenth paragraph before the Post actually tells you: "The increase in spending came because consumers either borrowed or dipped into savings. The department reported that personal savings declined by more than $48 billion in November." Crikey.

Kevin Drum 12:26 PM Permalink | Trackbacks | Comments (50)

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Comments

[IP reveals a banned troll. Content deleted.]

Posted by: Keith on December 21, 2007 at 12:36 PM | PERMALINK

So what happens when everyone's savings are gone? MORE TAX CUTES! Yeeeehawwwww!

Wait, if I'm not making any money, then I wont have any taxes to cut? And I still wont have any savings. I hope they have good courses on bank robbery at my local community college...

Posted by: elmo on December 21, 2007 at 12:42 PM | PERMALINK

"Keep talking down the economy, Drum "

It always amuses me that the free market that neo-libs want us to build the foundation of our society on is fragile enough to be "talked down".

Posted by: jshinola on December 21, 2007 at 12:43 PM | PERMALINK

Yeah, I have the same feeling every time the media screams that gasoline prices are at an all-time-high -- except when you take into account inflation.

Posted by: Everett on December 21, 2007 at 12:46 PM | PERMALINK

Keith, all you have to do is bury your head in your covers, clap your hands and wish real hard, and nothing bad will happen.

I recently heard Alan Greenspan say there is a better than 50% chance of a recession in the coming year, I have also read polls indicating that most people think it is already here, and I have read the stories about this being a bad Christmas shopping season. All Kevin is doing is confirming the obvious with hard data.

Posted by: corpus juris on December 21, 2007 at 12:47 PM | PERMALINK

If people are dipping into savings so that they can spend more, it just demonstrated the great leadership of Bush who has encouraged consumers to get out there and spend.

No, way, sorry, that's what he said during his first recession.

Posted by: AI on December 21, 2007 at 12:47 PM | PERMALINK

yeah Keith, it's Kevin Drum who is responsible for garbage government statistics. in your world, the dow jones industrial average is the only measure which matters. fact that the dollar is crashing, housing market is crashing - those are just inconveniences. pollyanna called - wants her economic analysis back. wake up and smell reality. this administration is tearing the joint apart - unless you're one of the lucky ones in the top 1% income bracket. worst performance on the market averages since the 1930's, worst job creation, worst worst worst. hey, but walmart is hiring greeters at $7/hour - no benefits, of course. at least santa is on his way come tuesday. that oughta help.

Posted by: matt on December 21, 2007 at 12:49 PM | PERMALINK

I'm betting the original press release gave the nominal figures first, and the usual hackery followed. The personal savings number, meanwhile, may be worse than it looks (whee!) because simply looking at income versus outgo doesn't necessarily track the value of existing assets.

Posted by: paul on December 21, 2007 at 12:49 PM | PERMALINK
What possible excuse can there be for leaving the initial impression that incomes rose in November?
Simple reason.

Howard Schneider had a specific news hole to fill, and very little information to fill it with. So he made a separate paragraph out of an eight word sentence. Can't give all the real news in the first line of a filler paragraph, either. No one would read it. He stretched one real fact into that separate paragraph. To do that, he had to sneak up on the little real news he had to offer and put it in the last line.

Can't let that news hole go unfilled. The editors might give it to a real reporter.

See? It takes a 'professional' reporter knowledgeable about 'reporterial ethics' to pull off a technical challenge like that. A mere blogger would have delivered all the news in one very short line.

Posted by: Rick B on December 21, 2007 at 12:51 PM | PERMALINK

It isn't just negative talk, it's real enough. People are more strapped for cash these days and the news is beginning to reflect that. It's going to be a very bad next three years, no doubt about it.

Posted by: David W. on December 21, 2007 at 12:52 PM | PERMALINK

Is there any reason at all for a reporter to write a paragraph like this?

That person is a stenographer, not a reporter?
There is no such thing as business news reporting, only cheerleading?
That person knows who buys ads/butters their bread?

You really should have written: "Reporters never fail to anger me when they write paragraphs like this:"

Posted by: F. Frederson on December 21, 2007 at 12:57 PM | PERMALINK

The increase in spending came because consumers either borrowed or dipped into savings.

Somehow all of this reminds me of Jackie Chan and Owen Wilson trying to break out of jail in "Shanghai Noon": No, you said "wet shirt don't break," not "piss shirt bend bar"!

Posted by: Doc at the Radar Station on December 21, 2007 at 1:07 PM | PERMALINK

Wapo:

Full of unreconstructed Monetarists, salting economic news with subliminal lessons on money illusion.

Posted by: MaryCh on December 21, 2007 at 1:08 PM | PERMALINK

Kevin, you point out the obvious and then the insults coming flying your way. The only sweet take on this is that it's the holiday season and Bush is still in office so the writer didn't want to make us more depressed than we already are.

Posted by: jen flower on December 21, 2007 at 1:14 PM | PERMALINK

I plead guilty. I'm spending my savings. I know, I know.

The only circumstances I can plead are I've been saving up for this time of my life ever since I got out of college. I'm married and have two children, 4 years old and 1 year old, and both in daycare at $1400 a month. I also bought a house before the first was born. The mortgage is 28.51% of my gross monthly income (though I'm paid 26 times a year, it makes each paycheck look smaller, though I get two extra a year relative to being paid twice monthly).

I'm also paying pretax $ into flexible healthcare spending and daycare accounts, which makes my takehome that much smaller. I get reimbursed later, but I do spend savings in the meantime.

When the older child gets into our excellent neighborhood public school (not being sarcastic - it's ranked in the 10th of 10 deciles in California) we'll save a buttload of money. Until then, I'm eating oatmeal. No really, I am right now, at my desk.

Posted by: anonymous on December 21, 2007 at 1:15 PM | PERMALINK

off topic, as usual, skippy has bit of an update on the writers strike, only in that, on the same day hollywood execs accuse the writers of not caring about the effect of the strike on the community, the producers also refuse to attend a los angeles city council meeting held to discuss the effect of the strike on the community (also, ratings proof that game/reality shows are losing to reruns of written shows this month).

Posted by: skippy on December 21, 2007 at 1:20 PM | PERMALINK

"Is there any reason at all for a reporter to write a paragraph like this?"

Sure! Economic (and simple mathematic) illiteracy, for one.

Posted by: Quaker in a Basement on December 21, 2007 at 1:22 PM | PERMALINK

Kevin asks: "Is there any reason at all for a reporter to write a paragraph like this? ... What possible excuse can there be for leaving the initial impression that incomes rose in November?"

An editorial policy of deliberate deceit.

Posted by: SecularAnimist on December 21, 2007 at 1:24 PM | PERMALINK

[IP reveals a banned troll. Content deleted.]

Posted by: Keith on December 21, 2007 at 1:28 PM | PERMALINK

bank robbery

A man recently arrested for bank robbery explained he did it because he was behind on his child support payments and was threatened with jail by local law enforcement, which likes to obtain publicity by arresting dead beat dads, if he did not pay up. He robbed a bank to avoid going to jail.

When people are under financial stress and have no way of earning money they urgently need, they make very bad choices.

Posted by: Brojo on December 21, 2007 at 1:29 PM | PERMALINK

[IP reveals a banned troll. Content deleted.]

Posted by: Keith on December 21, 2007 at 1:31 PM | PERMALINK

Keith, the more you cite abstract statistics and ignore what working-class people are saying, the more I know the Republicans will be crushed in 2008 at the polls.

Posted by: David W. on December 21, 2007 at 1:33 PM | PERMALINK

[IP reveals a banned troll. Content deleted.]

Posted by: Keith on December 21, 2007 at 1:35 PM | PERMALINK

Oh, and Everett? At $3 a gallon, the price of gasoline is at an inflation-adjusted all-time high. So can we retire that bit of conventional flimflammery?

Posted by: Quaker in a Basement on December 21, 2007 at 1:37 PM | PERMALINK

I can ignore Keith in peace knowing that not too long from now his disingenuous comments will be deleted.

Posted by: Tyro on December 21, 2007 at 1:38 PM | PERMALINK

[IP reveals a banned troll. Content deleted.]

Posted by: Keith on December 21, 2007 at 1:39 PM | PERMALINK

Not that I disagree with you in principle, Quaker in a basement, but that chart isn't conclusive. Can you find a better one?

Posted by: anonymous on December 21, 2007 at 1:41 PM | PERMALINK

About those higher retail sales in November, from MarketWatch:

U.S. retail sales rose sharply in November, pushed higher by rising gasoline prices, the Commerce Department reported Thursday.

Posted by: David W. on December 21, 2007 at 1:41 PM | PERMALINK

The reporter is using the well tested good-news-bad-news technique. Its a popular PR strategy designed to leave a more postive impression with the reader. Reverse it and you get the opposite effect. Psychologists have oodles of reasearch on this stuff. Essentially the reporter wants us to think the economy ain't so bad without fudging the facts. Oh, and BTW, what possible excuse could he have for doing this - how about POLITICS!

Posted by: jerseymissouri on December 21, 2007 at 1:46 PM | PERMALINK

David W.: You mean that gasoline is counted in "retail sales?" That's stacking the deck!

Posted by: idlemind on December 21, 2007 at 1:49 PM | PERMALINK

The biggest warning sign is when someone says "simple".

And here I thought KD was defending the foibles of our "liberal-biased" media, one of those foibles being a perverse lack of appreciation for couching reality in easy-to-swallow jet-puffed lumps of misdirection. My bad.

Posted by: Zit on December 21, 2007 at 1:53 PM | PERMALINK

By the time I retire I plan on making a trillion dollars a day. Only a pessimist would measure these future earnings in terms of bread loaves.

Posted by: B on December 21, 2007 at 2:02 PM | PERMALINK

pushed higher by rising gasoline prices...

Hmmm. I wonder where you can get data on just Q, not PxQ?

Posted by: Doc at the Radar Station on December 21, 2007 at 2:09 PM | PERMALINK

Not that I disagree with you in principle, Quaker in a basement, but that chart isn't conclusive. Can you find a better one?

Don't know the details about gasoline, but the inflation adjusted high for a barrel of oil was $101 back in the early 80s. We've almost reached that several times, and surely will be well above it by the time GWB leaves office.

Posted by: Disputo on December 21, 2007 at 2:21 PM | PERMALINK

Quaker in a Basement:

You are quite right -- at $3 a gallon, gas is approximately tied with the all-time-time that was reached in the early '70s.

But here's an example where CNN claimed gas was at an all-time-high at $2.50.

We should enforce consistency on both the left and right.

Posted by: Everett on December 21, 2007 at 2:30 PM | PERMALINK
Is there any reason at all for a reporter to write a paragraph like this?
Economic illiteracy. Surprisingly common among journalists and editors, even those covering economic policy. Posted by: R Johnston on December 21, 2007 at 2:54 PM | PERMALINK

It always amuses me that the free market that neo-libs want us to build the foundation of our society on is fragile enough to be "talked down".

When their entire movement relies on managing perceptions and expectations, and has nothing to show for it, what do you expect?
.

Posted by: Grand Moff Texan on December 21, 2007 at 2:58 PM | PERMALINK

Well, my God, Kevin, at least the reporter DID get around to saying that real incomes had fallen in November once you took inflation into account. Frequently these days they don't even go that far.

Posted by: bruce on December 21, 2007 at 4:23 PM | PERMALINK

Also conveniently forgets to tell us whether this is median income or average income. Two very different things.

Posted by: bobbo on December 21, 2007 at 4:45 PM | PERMALINK

Here's a neat little inflation calculator I found the other day.

http://data.bls.gov/cgi-bin/cpicalc.pl

Posted by: Luther on December 21, 2007 at 6:21 PM | PERMALINK

If a Retadican loses money in the woods, and no one is around to report it...does he lie about it?

Posted by: elmo on December 22, 2007 at 12:05 AM | PERMALINK

OTOH, GDP grew 4.9% in Q3 of 2007, and the recently passed Energy Bill guarantees $billions more investment in domestic energy technologies and supplies. Fuel prices probably won't decline, but they'll probably stop increasing (locally, they have declined about 6%, but I do not know about national statistics.) Energy output from solar, wind, and biofuels will approximately double in 2008.

Keep your chin up! Not all of the economic news is bad.

Posted by: MatthewRmarler on December 22, 2007 at 2:44 PM | PERMALINK

disputo: Don't know the details about gasoline, but the inflation adjusted high for a barrel of oil was $101 back in the early 80s. We've almost reached that several times, and surely will be well above it by the time GWB leaves office.

maybe, maybe not. Internationally, oil production probably will not increase, and demand will probably not decrease. In Canada, however, new technologies probably will produce dramatic increases in rate of production; U.S. petroleum consumption may be declining; and U.S. alternative energy production will increase significantly, including the first commercial scale production of cellulosic ethanol. or maybe not. Any prediction about 2008 fuel prices needs to be accompanied by many qualifications. Where I buy gasoline, the two-week "trend" in price is down.

About 10 miles from my house, a closed-over landfill began producing methane in commercially relevant amounts in 2007. Look for many more such developments in 2008. At least 5 technologies now produce fuel from waste (municipal waste, feedlot waste, sewage, etc.)

Posted by: MatthewRmarler on December 22, 2007 at 2:59 PM | PERMALINK

I used to work with several former citizens of the USSR. They'd tell me about the junk economic data and phony war news (Afghanistan) the government would put out, and not only did no one believe it, but people became very good at reading between the lines to find some actual useful information behind the propaganda.

But mostly they had to talk to actual people (returning war vets, people who worked in industry and government bureaucracies) to find out what was really happening.

Posted by: Speed on December 23, 2007 at 9:59 AM | PERMALINK

And here's a good website about Shadow Govt Statistics:

http://www.shadowstats.com/cgi-bin/sgs

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