Because bad reporting is good for people who own newspapers?

Because corporate bosses of the new MSM don't think it's important to hired qualified editors?

Because they are cheerleaders for the Republicrat Party?

Because ignorance is bliss?

Because the press release put it that way and reporters, especially business reporters, aren't trained to think the way you'd like. I say this as a former business reporter. Most reporters are good at getting together quotes and data to support already articulated thesis. So when the government releases a report saying spending went up, that's how the reporter approaches the story. If anything, I'm sure everyone at the paper thought she did a good job by pointing out the fact the assertion is complete bunk by the third paragraph.

I know that my gas and grocery bills are up, but the bargoons on clothing at the local mall have been so good that I've actually opened up my wallet and spend more on frivolities than I did last year.

Dean Baker asks that question just about every day in his blog.

Actually, Kevin, on this point I do think real and nominal dollars are relevant. People did SPEND more, but they bought LESS. So, the correct lede is more like "Consumers purchased less last month, but they spent more due to rising prices." You can spin that 1000 ways, but to say nominal dollars are irrelevant on spending I think is a bit too simplistic. In fact, I think the headline you propose of "Consumer spending drops" is actually wrong. People ARE spensing more. Its just that they don't get as much for their money. How about: "Consumers buy less in June." That is correct.

I have to agree with bobbyp. I think you have switched my understanding of real dollars and nominal dollars. If I paid $50 to fill my tank with 14 gallons o fgas, that is a definite fact. It is independent of what I paid last year for that 14 gallons. I would call that real dollars. You want to apply a correction factor to that handle the effect of inflation. What year dollars do you want to use? FY 2007? Why stop there? The hard data is what is actually spent each year. You are then free to explain what that means. The arcticle was not very clear. I think bobbyp had bith an accurate and precise statement, that is hard to misinterpret.

Agree with previous comments. We are BUYING less, not spending less. If the price of gasoline doubled next week and we bought 35% fewer gallons, we'd still be spending more on fuel.

You know, if I was Rush Limbaugh I'd take the headline Higher Prices Outpace June Spending by Consumers as proof that the Liberal Media are deliberately talking down the economy, and that consumer spending is, in fact, up.

I'd be full of sh!t, of course, but that's what I would say if I was Rush.

I hate it!

in other words, consumers spent more but got less.

that's actually what happened, not spending declined. my dollar doesn't adjust for inflation. i've never seen one that does. (is an adjustable dollar like an adjustable wrench?)

on the other hand, i do agree the story is badly written.

Mudwall, what do you mean your dollar doesn't adjust for inflation? Of course it does. It is worth less now. So you bought less, and yes, you spent less. These comments just show what you're up against, Kevin.

Look: the right way to write this headline is: "Consumer Spending Drops in June." The right way to write the lead is: "Consumer spending decreased in June by 0.2%, the Bureau of Economic Analysis reported Monday." ... Why is this so hard?

—Kevin Drum

So, from now on, assuming that your wife does the grocery shopping, you'll be satisfied if she just says, "I spent .2% less in constant dollars on food today?"

While you are correct Kevin, if they don't lead with the nominal increases - Lawrence Kudlow would never be able to understand the story!

When consumers spend more money and receive less goods and services, they know, despite what the owners of mass media want them to think, inflation is the cause. Regardless of what lies the media tells these consumers about the state of their economic well-being, even the most illiterate know they are being screwed by those with economic power.

Look: the right way to write this headline is: "Consumer Spending Drops in June." The right way to write the lead is: "Consumer spending decreased in June by 0.2%, the Bureau of Economic Analysis reported Monday."

That depends on the focus. While certainly I think the press often gets it wrong on things like this, I'm not sure this particular case is an example.

Yes, if you are just interested in the highlighting the real decrease in consumer spending, then your headline would be right; OTOH, the headline manages to capture three important issues in one brief statement:
1) Prices are rising,
2) Nominal spending is up, and
3) The relationship between #1 and #2 is such that real spending is down.

So, its a much more useful headline than the one you propose.

Real dollars are the only real kind of dollars and should always come first

Uh, no. "Real" dollars are, despite the name, an artifice of quite debatable utility for any given pupose based on inflation methodology which, even notionally, isn't applicable to all consumers (much less all prices), and which nevertheless is used as if it were general. The only real dollars are, ironically, "nominal" dollars -- those are the kind that are in your bank account or wallet. You can't buy "dollars" that are chained to the CPI-U or any other inflation measure, after all.

Nominal dollars should come later. Why is this so hard?

Because, contrary to people whose only interest is abstract comparisons, real people care intensely about what is going on with nominal dollars, since those are the kind they deal with. Occasionally, the press gets it right, and manages both to focus on the immediate interests of real people and communicate enough to understand the broader issues.

You and Dean Baker should get together and have a crying party. This is one of his pet peeves too--and with good reason.

"Consumers spend more dollars, receive less goods and services," will not be the kind of headline that large media businesses choose until after Obama wins the presidency.

it's because nominal dollars are more fun than real dollars. for example it is a lot more fun to whine about an increase in the minimum wage than it is to notice it is still far lower in purchasing power (real dollars) than it was in 1968 and complain about the gop's effectiveness in preventing its rise.

In this case, I think it's reasonable to talk about nominal dollars, as commenters above have mentioned. I'll add something frivolous to this, though:

Real dollars are the only real kind of dollars

I'm reminded of something Daniel Dennett mentions in his talks: When people say "real magic", they're generally referring to something that doesn't exist, in contrast to "fake magic", which in fact is the only kind of magic we ever see. "Real" dollars, similarly, aren't those dollars you can pull out of your wallet and hold in your hand--those are "nominal" (i.e., in name only) dollars.

For many years inflation has been relatively mild, so people are used to ignoring it. As the Bush administration's fiscal mismanagement produces the inevitable higher inflation, reporters will start being cognizant of its effects, as will news consumers.

If we get to genuine hyperinflation (pray we don't) then a huge sea change in economic psychology will take hold, and everybody, even the dittoheads and low-information voters, will become intimately acquainted with the difference between real and nominal dollars.

Most Americans are innumerate, Kevin, in addition to being illiterate. When you bring up concepts like real vs. nominal prices, people's eyes glaze over. That is part of the reason we have a $9 trillion national debt and most people don't seem too concerned. It doesn't mean jackshit to them....

How about:

"As prices continue to rise and wages lag behind, consumers are buying less and getting less for each dollar they spend."

No reason to invoke real vs. nominal dollars or inflation adjustments to explain the impact on "real" consumers.

We all know that we buy fewer goods and services when we feel the pinch. We also know that belt tightening only goes so far. We're all fucked if inflation accelerates OR consumer buying decreases so much that a vicious cycle of layoffs results. No job, no money, no purchases -- rinse, lather, repeat.

You "spend" dollars.

You "buy" or "purchase" goods or services.

Obviously they are strongly correlated, but measuring dollars is not as good an indicator of changes in consumer demand as simply counting the amount of goods purchased: How much gas did we buy? How many mp3 files did we download? How many lattes did we buy? How many miles did we drive? How many airline tickets did we buy?

I realize the utter impracticality of actually tallying that up, but do we really trust that the adjustments applied by economists to account for inflation are adequate? There is so much spatial and temporal variability in prices, that I think other data are needed to paint the complete picture.

The recent Starbuck's closings probably tell a better story about what's going on than "consumer spending" measured in dollars.

I too have a problem with the lede ("Consumer spending increased in June, but those gains...")

The reporter, having already used "increased" for spending, fell back on "gains" to complete the thought. This is nonsensical. Who gained?

Rewrite: "Consumer spending increased in June, as higher prices forced buyers to fork over more cash for their purchases."

It ain't poetry, but tells the whole tale in 25 words or less while avoiding the quagmire of "nominal" vs "real".

The basic problem here is the tautological relationship between spending and prices. If the cost of a gallon of gas rose from $3 to $4 (I know, I know, that could never happen but play along with me here), spending is (almost) inevitably going to rise.

But, this is the Alice-in-Wonderland regime, where the nominal is not real, and the real is not mentioned in polite company. Anyone care to speculate on the "real" rate of inflation and how that would have affected the lede of this story?

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