Just the Facts, Erin
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Yesterday evening, May 8, Erin Burnett, host of CNN’s “Erin Burnett Out Front”, interviewed President Biden. When Ms. Burnett was with Bloomberg News, she was my favorite presenter because her facial expressions indicated whether the person she was interviewing was saying things that were illogical or were fabrications. So, it was with some disappointment when Ms. Burnett made some false or misleading statements when interviewing President Biden yesterday evening about the state of the US economy.
Ms. Burnett had a lot to say about the higher inflation that exists today compared with February 2020. Yes, as shown in Chart 1, the year-over-year percent change in the Personal Consumption Expenditure (PCE) chained price index was 2.71% in March 2024 compared to 1.64% in February 2020. Ms. Burnett received a BA in economics from Williams College. Did her macro and money/banking professor not teach her that inflation is everywhere and always a monetary phenomenon? And what quasi-government agency in the US is responsible for monetary matters?
Chart 1
But then Ms. Burnett stated that household real incomes were down. Not true, as shown in Chart 2. Both aggregate real disposable personal incomes and per capita real personal incomes are higher in March 2024 than they were in February 2020. So, yes, Ms. Burnett, the rate of inflation currently is higher than it was in February 2020, but, adjusted for the higher price level, incomes are higher.
Chart 2
Ms. Burnett talked a lot about higher food prices. Yes, the level of food prices is higher currently than they were in February 2020, but aggregate nominal disposable income has increased to the same degree as have food prices. This is demonstrated in Chart 3 in which are plotted the index of nominal disposable income and the index of the PCE chain price index for food purchased for off-premises (home) consumption. Both indices have a base of 100 for February 2020. In March 2024, the index for nominal disposable income was 125.33 compared to the 125.14 March food-price index. Again, increases in nominal disposable incomes have kept pace with increases in food prices.
Chart 3
If households are worse off economically today than they were in February 2020, just before Covid hit the fan, how is that they are spending more of their disposable incomes on discretionary items (items other than food, clothing, energy and housing) in March 2024 than they were in February 2020? (See Chart 4.) The implication of Ms. Burnett’s questions to President Biden was that households today had to spend more of their incomes on necessities rather than luxuries. The data do not bear this out.
Chart 4
I realize that Ms. Burnett is in the entertainment business rather than the objective news and analysis business. And I realize that being in the entertainment business, Ms. Burnett had to ask her share of “gotcha” questions. But come on, Ms. Burnett. Get your facts straight.
Paul L. Kasriel
AuthorMore in Author Profile »Mr. Kasriel is founder of Econtrarian, LLC, an economic-analysis consulting firm. Paul’s economic commentaries can be read on his blog, The Econtrarian. After 25 years of employment at The Northern Trust Company of Chicago, Paul retired from the chief economist position at the end of April 2012. Prior to joining The Northern Trust Company in August 1986, Paul was on the official staff of the Federal Reserve Bank of Chicago in the economic research department. Paul is a recipient of the annual Lawrence R. Klein award for the most accurate economic forecast over a four-year period among the approximately 50 participants in the Blue Chip Economic Indicators forecast survey. In January 2009, both The Wall Street Journal and Forbes cited Paul as one of the few economists who identified early on the formation of the housing bubble and the economic and financial market havoc that would ensue after the bubble inevitably burst. Under Paul’s leadership, The Northern Trust’s economic website was ranked in the top ten “most interesting” by The Wall Street Journal. Paul is the co-author of a book entitled Seven Indicators That Move Markets (McGraw-Hill, 2002). Paul resides on the beautiful peninsula of Door County, Wisconsin where he sails his salty 1967 Pearson Commander 26, sings in a community choir and struggles to learn how to play the bass guitar (actually the bass ukulele). Paul can be contacted by email at econtrarian@gmail.com or by telephone at 1-920-559-0375.