Three Additional Points On The NY Times’ Piece On Blah Voters – OpEd
The New York Times’ lead homepage article Thursday told readers that in spite of a batch of really good economic data, “voters still feel blah.” There are several points that are worth adding to the discussion in the piece.
Prices Are Still High
The first point is that the piece starts with an often-repeated complaint that, even though inflation has slowed roughly back to its pre-pandemic pace, prices are still high. This is an absurd complaint in the sense that nothing can be done about prices being high, as every economics reporter knows.
Wages have risen by more than 23 percent since the start of the pandemic. Prices cannot return to anything like their pre-pandemic level with the current level of wages. We could have a horrible depression, which could eventually force wages down, but it is unlikely that many of the complaining consumers really want to see 20 percent unemployment.
The profit share of income has risen by roughly 2.0 percentage points. The reversal of this increase could allow for some price reductions without wages falling, but it is more likely that we would see a slower pace of price rises even as wage growth continues at its current rate, rather than an actual drop in prices.
In short, the complaint that prices are still high is comparable to people complaining that it’s cold in winter or dark at night. People might be bothered by the cold weather or the darkness, but there is nothing that can realistically be done about it.
Unfortunately, because the media have repeated the complaint endlessly, they have legitimated it and made it part of the national political debate. This is a serious failing of economic reporting.
Most Workers’ Pay Has Kept Pace with Inflation
At one point the piece tells readers: “Wages have climbed faster than prices for many consumers, but that is not true across the board.” That might leave the impression that wage growth in excess of inflation is the exception. In fact, most workers — especially lower paid workers — have seen wage growth that outpaces inflation.
Wages for workers in the bottom decile of the wage distribution saw their wages outpace inflation by more than 12.0 percent from the start of the pandemic to the end of 2023. (The gap would be even larger with more recent data.) This is the fastest wage growth for these workers in half a century.
China’s Growth is Considerably More Rapid Than Growth in the US
At one point the piece notes that consumers are spending at a rapid pace, in spite of saying they think the economy is bad, and the US is doing better than other countries: “Even if consumers say they feel bad in surveys, they have shown a willingness to keep spending, and US growth is much stronger than what countries like Germany or China are experiencing.”
While the US economy has done significantly better since the pandemic than other wealthy countries, its growth actually lags China’s growth. While US GDP growth will probably come in at just under 3.0 percent in 2024, China is likely have growth of close to 5.0 percent.
While China remains considerably poorer than the United States on a per person basis, it is not widely recognized that its economy is already considerably larger than ours. This gap is increasing through time.
- This article was published at Dean Baker's Beat the Press