Misleading NYT/Globe Articles Portray Income Growth as Income Decline

NewsBusters ^ | Mark Finkelstein

[governsleastgovernsbest]

Dispatch from the Department of Lies, Damned Lies, and Statistics, MSM Division . . .

Today's New York Times contains an article about sleight of hand. Elsewhere in the paper, the Times engages in some statistical prestidigitation of its own.

You're the New York Times and its minor-league subsidiary, the Boston Globe. You obtain government data showing that Americans' incomes have risen every year since 2002. So how do you spin it in your headline? If you're the Times: Average Incomes Fell for Most in 2000-5. The Globe had its own gloomy take: More Americans making ends meet with less money.

What-t-t? How did the papers manage this statistical sleight-of-hand? How did they transform income growth into income decline? Read the opening sentence of the Globe article:

Americans earned a smaller average income in 2005 than in 2000, the fifth consecutive year they had to make ends meet with less money than at the peak of the last economic expansion, new government data show.

You couldn't blame a reader for understanding that sentence to mean that incomes have declined every year since 2000. Reading down into the Times article, however, we learn that in fact "incomes have been on the rise since 2002."

So what's going on? Stick with me here. The answer is that incomes spiked in 2000 at the height of the internet bubble. When the bubble burst, incomes went down for a couple years. But in 2002, incomes renewed their growth and have risen every year. But average income in 2005, adjusted for inflation, was still slightly below that of 2000: $55,238 in 2005 versus $55,714 in 2000. Note "adjusted for inflation." In other words, the unadjusted income of Americans in 2005 was actually about $60,000, or about $5,000 higher than in 2000. The Times-Globe never told us what the unadjusted 2005 income was: that would have made their case look weaker.

There's one other telling number in the Globe article. In the second paragraph, the Globe writes: "Total adjusted gross income in 2005 was $7.43 billion." That jumped out at me: clearly it's impossible that the combined incomes of all Americans totalled a minute seven billion and change. I went over to the Times, and sure enough, found that the number was $7.43 trillion. Just a simple typo, some might say. But what does it say about the Globe's basic ignorance of the economy that this error, in which income is understated by a factor of 1,000, could have slipped by the editors?

In any case, these twin articles are a good illustration not just of how statistics can be manipulated, but how the MSM will do so to the detriment of a Republican administration. Imagine that a Dem were in the White House today. I'm guessing the headline would have, accurately, read along the lines: "Income Growth Continues Annual Climb." What are the odds the headline would have had the same negative twist of this morning's articles? One in a billion. Whoops: make that one in a trillion.

[governsleastgovernsbest]

Times-Globe lying-with-statistics ping to Today show list.

[governsleastgovernsbest]

Times-Globe lying-with-statistics ping to Today show list.

[raybbr]

Sure they're playing numbers games. But. It's that "adjusted for inflation". Lot's of people like to use that to show that we are better off but when it shows that we are losing ground it's dismissed.

Note that fuel and food costs are figured in the CPI. Those are "special" numbers that are excluded because they are deemed too volatile. I think it's time to change that. Propane has gone up 120% in five years and orange juice is now $8/gal.

[raybbr]

Note that fuel and food costs are figured in the CPI.

Are NOT figured into the CPI.

[Sapper26]

Like the saying goes: There are lies, damn lies and statistics.

[deaconjim]

The NYT and the Globe are what? Newspapers? Does anyone read them anymore? Perhaps stuff like this is the reason why most folks get their news elsewhere.

[rockinqsranch]

I remember starting to read that article as I thought it was an incredulous assumption. I remember reading only to the point in which the author(s) expressed increased population, which is dilution, thus their figures and went on to some other articles looking for something intelligent to cleanse my brain.

Perhaps I should have read the whole thing, but at the time it seemed I would be ruining my day.

[Loyal Buckeye]

The NYT and the Globe are what?

Dog cage lines, except for those owners whose dogs have cancelled their subscriptions.

[maica]

Thank goodness for the sanity of newsbusters articles, and for their intent to expose the media’s lies.

[Mase]

[b]Note that fuel and food costs are figured in the CPI.[/b] Are NOT figured into the CPI

You were right the first time. You've been making this mistake for years now even though you are constantly corrected. Why do you persist? Could it be intentional?

[maica]

For contrast, the Investors Business Daily has a very positive take on the current sconomic situation.

“Our economy’s core soundness was reflected in this month’s IBD/TIPP survey. In spite of the serious problems associated with subprime mortgages, the IBD/TIPP Optimism Index rose by 2.6% to 49.5, its highest since March and just below the make-or-break optimism threshold of 50. Lower gas prices, rising incomes and low unemployment kept consumers’ spirits high.
Dovetailing with our findings was a remarkable Harris Poll of about 1,000 adults polled in July published last week. It showed no less than 94% of Americans expressing satisfaction with their lives. Well over half of those polled — 56% — said they were very satisfied. Satisfaction is up from surveys in 2003 and 2005.

“More than half of the respondents — 54% — said their own situation has improved over the past five years. Three out of five — 62% — expected things to get better over the next five years.

“The long-term trust those numbers reflect are a welcome counterbalance to last week’s University of Michigan consumer sentiment preliminary index, which fell to its lowest since August 2006.”

Reasons For Cheer
By INVESTOR’S BUSINESS DAILY | Posted Monday, August 20, 2007 4:20 PM PT

http://www.ibdeditorials.com/IBDArticles.aspx?id=272501399469132

[JohnLongIsland]

there was one article in some MSM paper that stated: “50% of american families below median income level.”

[Stallone]

I like this one: “100% of Mainstream Media is full of shiite”.

[NonValueAdded]

Technically then, it was not the income that failed to increase, it was the spending power of that income when adjusted for inflation. Or they should have qualified the headline “... in constant 2000 dollars” or some other such baseline. And we have yet to feel the full inflationary impact of the minimum wage increase.

[raybbr]

Where is “fuel” in your chart?

[BreezyDog]

Similar thread: NYT Lie

[raybbr]

What the Fed Does

People expect that, by regulating the money supply, the Federal Reserve will be able to keep consumer prices stable... and also to keep the economy growing at a reasonable rate and to keep unemployment low. That's already more "goals" than "controls", which would result in some pretty schizophrenic marching orders. For example, if OPEC announces that they plan to cut oil output in order to drive prices up, should the Fed raise interest rates to fight inflation... or see the higher oil prices as a recessionary factor, and maybe even think about lowering interest rates?

To see the answer, just notice that this isn't really a monetary problem: the higher oil prices aren't the result of too much easy money. That means that restricting the money supply wouldn't be a fix, so the Fed won't raise interest rates.

This example shows why energy prices are one of the special indices that get excluded from the Core CPI numbers: energy prices are volatile enough that when they change it doesn't tell you very much about the rate of inflation overall.

 

Food and beverages Housing Apparel Transportation Medical care Recreation Education and communication Other goods and services	Total CPI
- Energy   - Food	Special Indexes
Total CPI  minus  Special Indexes	Core CPI

 

[Uncle Miltie]

“Average” is often a bad measure. It includes the super-wealthy and their dot-com gains dragging the 2000 numbers up.

“Median” is more like the usual American, the guy exactly in the middle.

That the NYT reported the Average not the Median probably means the Median has been rising nicely, thank you very much.

[jurroppi1]

That would be included in “Housing” and “Transportation”

[MikeHu]

Why, that’s outrageous!

At least 90% of the incomes should be more than the median income!