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What Does It Sound Like When You Hear Inflation Rose 8% in May?

The Consumer Price Index picked up by 8.6 percent, as price increases climbed at the fastest pace in more than 40 years (New York Times).

If you don’t think about it too hard, it sounds like prices rose 8.6% in May. But that’s not true.

The Department of Labor’s Consumer Price Index actually rose 1.0% in May. The 8.6% increase refers to the fact that the index was 8.6% higher than a year ago.

Would it be too hard for news people to write headlines that clearly conveyed what happened? No, but it wouldn’t sound as “newsworthy” (i.e. interesting) to say prices rose 1.0% in May or that they rose 8.6% in the past year.

What makes this especially annoying is that this is how the government announced the latest inflation news:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.0 percent in May on a seasonally adjusted basis after rising 0.3 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.6 percent before seasonal adjustment.

The increase was broad-based, with the indexes for shelter, gasoline, and food being the largest contributors. After declining in April, the energy index rose 3.9 percent over the month with the gasoline index rising 4.1 percent and the other major component indexes also increasing. The food index rose 1.2 percent in May as the food at home index increased 1.4 percent.

The index for all items less food and energy rose 0.6 percent in May, the same increase as in April. While almost all major components increased over the month, the largest contributors were the indexes for shelter, airline fares, used cars and trucks, and new vehicles.

It’s so much easier to simply say, as the Wall Street Journal did:

Inflation Reaches 8.6% in May

Back to the New York Times for an explanation, not a headline:

In the short term, high inflation can be the result of a hot economy — one in which people have a lot of surplus cash or are accessing a lot of credit and want to spend. If consumers are buying goods and services eagerly enough, businesses may raise prices because they lack adequate supply. Or companies may choose to charge more because they realize they can raise prices and improve their profits without losing customers.

But inflation can — and often does — rise and fall based on developments that have little to do with economic conditions. Limited oil production can make gas expensive. Supply chain problems can keep goods in short supply, pushing up prices.

The inflationary burst America has experienced this year has been driven partly by quirks and partly by demand.

On the quirk side, the coronavirus has caused factories to shut down and has clogged shipping routes, helping to limit the supply of cars and couches and pushing prices higher. Airfares and rates for hotel rooms have rebounded after dropping in the depths of the pandemic. Gas prices have also contributed to heady gains recently.

For those who think gas prices are all Biden’s fault, a word from the Deputy Director of the National Economic Council:

A big reason gas prices are up is because companies cut refinery capacity in 2020 under the last administration [you know who’s]. US refinery capacity went down by 800,000 barrels per day. Refiners are now making bigger [profits by] raising prices at the pump.

The second big reason gas prices are up is Putin’s actions in Ukraine and the global response raising oil prices. Pump prices are up more than $1.60 since then. Our response had the backing of Republicans…

At any rate, here is US oil production in thousands of barrels starting in 2020, a year before Biden took office (there is no Biden “War on Oil”):

Untitled

And back to the Times:

But it is also the case that consumers, who collectively built up big savings thanks to months in lockdown and repeated government stimulus checks, are spending robustly and their demand is driving part of inflation. They are continuing to buy even as costs … rise, and they are shouldering increases in rent and home prices. The indefatigable shopping is helping to keep price increases brisk….

Officials say they do not yet see evidence that rapid inflation is turning into a permanent feature of the economic landscape, even as prices rise very quickly.

But nobody knows for sure. One thing I do know is that the Republicans who are blaming Democrats for high inflation have no plan to address it, and cutting taxes for the rich and corporations (their standard, well, only policy idea) would make inflation worse.

In case you’re really interesting, here are the monthly price increase for the past 13 months, which, by my arithmetic, add up to more than 8%:

MAY ’21 +0.7%   JUNE +0.9%   JULY +0.5%      AUG. +0.3%        SEPT. +0.4%              OCT. +0.9%        NOV. +0.7%    DEC. +0.6%     JAN. ’22 +0.6%    FEB. +0.8%          MARCH +1.2%   APRIL +0.3%   MAY +1.0%

I bet June will be lower.

Watergate Would Have Been a Bump in the Road

June 17th will be the 50th anniversary of the Watergate burglary, the poorly-executed crime that eventually led to President Richard Nixon’s resignation in lieu of impeachment. Margaret Sullivan of The Washington Post points out Nixon would have easily finished his second term if his “plumbers” had been discovered nowadays:

Thinking about Watergate saddens me these days. The nation that came together to force a corrupt president from office and send many of his co-conspirator aides to prison is a nation that no longer exists.

It’s not just our politics that have changed. It’s also our radically transformed media environment.

“The national newspapers mattered in a way that is unimaginable to us today, and even the regional newspapers were incredibly strong,” Garrett Graff, author of “Watergate: A New History,” told me last week. I have been immersed in his nearly 800-page history . . . that sets out to retell the entire story.

Graff depicts Watergate not as a singular event but as the entire mind-set of the Nixon presidency — “a shaggy umbrella of a dozen distinct scandals,” as he told me. By the time the break-in captured the attention of the most Americans, they were essentially “walking into the second or third act of a play.”

Woodward and Bernstein were almost alone on the story for months. But eventually the leading newspapers of the nation started to cover the hell out of the burgeoning scandal and the percolating questions of what — and when — the president knew about the burglary plot.

Americans read this coverage in their local papers; many cities still had two or more dailies at that point. Later, they were riveted by the proceedings of the Senate Watergate Committee, whose hearings were aired live on the three big television networks during the summer of 1973. Graff reports that the average American household watched 30 hours of the hearings, which were also rebroadcast at night by PBS. (“The best thing that has happened to public television since ‘Sesame Street,’” one Los Angeles Times TV critic noted.)

Still, “we forget how close Nixon came to surviving Watergate,” Graff told me. “Even at the end of the hearings, there was no guarantee that Nixon was out of office.”

What changed that? The increasing public awareness of the president’s wrongdoing and the coverup. “The sheer accumulation of the lies,” he said, “at a time when the idea that a president could lie to America was unthinkable.”

Flash-forward to today. The House select committee investigating the Jan. 6 insurrection will hold hearings beginning early next month, some of which will be televised during prime-time hours. Rep. Jamie Raskin, the Maryland Democrat who is a prominent member, predicts the revelations will “blow the roof off the House” — offering evidence, he promises, of an organized coup attempt involving Trump, his closest allies and the supporters who attacked the Capitol as they tried to overturn the 2020 presidential election results.

I’m willing to believe that the hearings will be dramatic. They might even change some people’s minds. But the amount of public attention they get will be minuscule compared with what happened when the folksy Sen. Sam Ervin of North Carolina presided over the Senate Watergate Committee.

Our media environment is far more fractured, and news organizations are far less trusted.

And in part, we can blame the rise of a right-wing media system. At its heart is Fox News, which was founded in 1996, nearly a quarter century after the break-in, with a purported mission to provide a “fair and balanced” counterpoint to the mainstream media. Of course, that message often manifested in relentless and damaging criticism of its news rivals. Meanwhile, Fox and company have served as a highly effective laundry service for T____’s lies. With that network’s help, his tens of thousands of false or misleading claims have found fertile ground among his fervent supporters — oblivious to the skillful reporting elsewhere that has called out and debunked those lies.

As Graff sees it, the growth of right-wing media has enabled many Republican members of Congress to turn a blind eye to the malfeasance of Team T____. Not so during the Watergate investigation; after all, it was Sen. Howard Baker, the Tennessee Republican, who posed the immortal question, “What did the President know and when did he know it?” Even the stalwart conservative Sen. Barry Goldwater of Arizona was among those who, at the end, managed to convince Nixon that he must resign.

“Republican members of Congress understood that they had a unique and important role as the legislative branch to hold the abuses of the executive branch in check,” Graff said. “That freedom of action was made possible because there was no right-wing media ecosystem.”

Not everything was good about the media world of the 1970s. . . . But it was a time when we had a news media that commanded the trust of the general public, a necessity in helping bring Nixon to justice. That, at least during his presidency, was never possible with D____ T____.

As we remember Watergate, we ought to remember how very unlikely its righteous conclusion would be today.

Richard M. Nixon’s presidency would have survived.

The Biden Boom

The economy sucks. It’s hard to escape that message, even if it’s not true. Eric Boehlert of Press Run criticized the reality-based press (not Fox) for “burying great news”:

Like clockwork, the first Friday of the month brought another blockbuster jobs report. The U.S. economy under President Joe Biden added another 400,000-plus new jobs in March, it was announced last week.

Biden is currently on pace, during his first two full years in office, to oversee the creation of 10 million new jobs and an unemployment rate tumbling all the way down to 3 percent. That would be an unprecedented accomplishment in U.S. history. Context: In four years in office, T____ lost three million jobs, the worst record since Herbert Hoover.

Yet the press shrugs off the good news, determined to keep Biden pinned down. “The reality is that one strong jobs report does not snap the administration out of its current circumstances,” Politico stressed Friday afternoon. How about 11 straight strong job reports, would that do the trick? Because the U.S. economy under Biden has been adding more than 400,000 jobs per month for 11 straight months.

The glaring disconnect between reality and how the press depicts White House accomplishments means a key question lingers: Why is the press rooting against Biden? Is the press either hoping for a T____ return to the White House, or at least committed to keeping Biden down so the 2024 rematch will be close and ‘entertaining’ for the press to cover? Is that why the Ginni Thomas insurrection story was politely marched off the stage after just a few days of coverage last week by the same news outlets that are now in year three of their dogged Hunter Biden reporting? (“ABC This Week” included 19 references to Hunter Biden yesterday.)

Just look at the relentlessly dour economic coverage. For the press, inflation remains the dominant, bad-news-for-Dems economic story. Even on Friday, the day the stellar jobs report was released, “inflation” was mentioned on cable news nearly as often as “jobs,” according to TVeyes.com.

Axios contorted itself by claiming Biden’s promise to add “millions” of new jobs (which he’s already accomplished), was being threatened because there aren’t enough workers, because so few people are out of work— or something.

The home-run report itself was often depicted as a mixed bag. These were some of the glass-half-empty headlines that appeared in the wake of the latest runaway numbers:

• “America’s Job Market Is On Fire. Here’s Why It Doesn’t Feel Like It” (CNN)

• “Booming Job Growth Is a Double-Edged Sword For Joe Biden” (CNN)

• “Why a Great Jobs Report Can’t Save Joe Biden” (CNN)

• “Unemployment Hits Pandemic Low in March, But Uncertainty Looms Ahead” (Washington Post)

• “Biden Gets a Strong Jobs Report, But a Sour Mood Still Prevails” (Washington Post)

Totally normal journalism, right? The president announces another blockbuster jobs report and the press presents it as borderline bad news.

Note that the above headlines about the sour mood prevailing despite the great jobs, and how uncertainty looms, came from the Post, the same outlet that slotted the March jobs report into 87th placed on its website on Friday.

That afternoon readers on the daily’s homepage had to scroll down 87 headlines before they saw the first reference to the great economic news. Among the headlines that ran higher on the Post site that afternoon [was] “What’s The Best Way to Share My Old Home Videos?”

On-air, CNN also downplayed the jobs report, according to Dean Baker, senior economist for Center for Economic and Policy Research. “CNN’s coverage of the report quickly turned to inflation,” he wrote. “In its more general coverage of the economy, the jobs report — which tells us about the employment and earnings situation for more than 160 million people — was barely a blip.”

Sunday’s “Meet the Press” round table featured two segments with assembled pundits. One focused on how immigration might be a problem for Democrats in the midterms, the other on how T____ might be a problem for Democrats in the midterms. As usual, Biden’s historic economic record was ignored.

That’s why, according to a recent poll, 37 percent of Americans think the economy lost jobs over the last year, when it’s gained 7 million. (Just 28 percent of people know jobs were up.)

Virtually all the Beltway coverage today agrees on this central point: When it comes to the economy, Biden’s approval rating is taking a hit because Americans are freaked out by inflation. But maybe it’s taking a hit because Americans are under the false impression that jobs are disappearing. Voters don’t know what they don’t know because the press isn’t interested in telling them about record job success and an economy that’s years ahead of where experts thought it would be coming out of a global pandemic.

Biden is facing not just one organized opposition in the form of the [Republican Party], but another in the form of the Beltway press corps.

Last week, they hit Biden with 14 separate questions at a press briefing over the supposed “gaffe” he made, expressing his moral outrage over the mass killings Russian President Vladimir Putn has unleashed in Ukraine. . . . The press didn’t ask a single question about the state of the Ukraine war.

And remember all winter how the press treated Covid as the most important “crisis” Biden faced and hung the pandemic around his neck? Today, the topic has vanished, the press has given the White House no credit for steering the country back to normalcy, and instead has latched onto gas prices as being a defining issue under Biden. The buried Covid coverage represents a telling example of how an issue that the press itself claimed would define the Biden administration gets translated into no news when it turns towards positive territory.

The Beltway press needs to take its thumb off the Biden scale.

Unquote.

The Labor Department reported today that there were 166,000 new jobless claims last week, the lowest number since November 1968, when the population was much smaller.

The change since Biden took office. They didn’t all start driving for Uber:  

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Sadly, the writer quoted above has died in a bicycle accident:

Eric Boehlert, a veteran journalist who was a fierce critic of right-wing misinformation and hypocrisy in the news media, died on Monday in New Jersey. He was 57.

What Goes Up, Will Go Down (Eventually)

Someone on Twitter said news people are covering inflation — a global post-pandemic phenomenon, not a Biden one — as if it’s 6,000%, not 6%, and we’re all pushing wheelbarrows of cash to the grocery store. On economic matters, I appreciate the views of Paul Krugman (Ph.D. Massachusetts Institute of Technology; currently Distinguished Professor of Economics, Graduate Center of the City University of New York):

Back in July the White House’s Council of Economic Advisers posted a thoughtful article to its blog titled, “Historical Parallels to Today’s Inflationary Episode.” The article looked at six surges in inflation since World War II and argued persuasively that current events don’t look anything like the 1970s. Instead, the closest parallel to 2021’s inflation is the first of these surges, the price spike from 1946 to 1948.

Wednesday’s consumer price report was ugly; inflation is running considerably hotter than many people, myself included, expected. But nothing about it contradicted C.E.A.’s analysis — on the contrary, the similarity to early postwar inflation looks stronger than ever. What we’re experiencing now is a lot more like 1947 than like 1979.

And here’s what you need to know about that 1946-48 inflation spike: It was a one-time event, not the start of a protracted wage-price spiral. And the biggest mistake policymakers made in response to that inflation surge was failing to appreciate its transitory nature: They were still fighting inflation even as inflation was ceasing to be a problem, and in so doing helped bring on the recession of 1948-49.

About Wednesday’s price report: It looked very much like the classic story of inflation resulting from an overheated economy, in which too much money is chasing too few goods. Earlier this year the rise in prices had a narrow base, being driven largely by food, energy, used cars and services like air travel that were rebounding from the pandemic. That’s less true now: It looks as if demand is outstripping supply across much of the economy.

One caveat to this story is that overall demand in the United States actually doesn’t look all that high; real gross domestic product, which is equal to real spending on U.S.-produced goods and services, is still about 2 percent below what we would have expected the economy’s capacity to be if the pandemic hadn’t happened. But demand has been skewed, with consumers buying fewer services but more goods than before, putting a strain on ports, trucking, warehouses and more. These supply-chain issues have been exacerbated by the global shortage of semiconductor chips, together with the Great Resignation — the reluctance of many workers to return to their old jobs. So we’re having an inflation spurt.

On the plus side, jobs have rarely been this plentiful for those who want them. And contrary to the cliché, current inflation isn’t falling most heavily on the poor: Wage increases have been especially rapid for the lowest-paid workers.

So what can 1946-48 teach us about inflation in 2021? Then as now there was a surge in consumer spending, as families rushed to buy the goods that had been unavailable in wartime. Then as now it took time for the economy to adjust to a big shift in demand — in the 1940s, the shift from military to civilian needs. Then as now the result was inflation, which in 1947 topped out at almost 20 percent. Nor was this inflation restricted to food and energy; wage growth in manufacturing, which was much more representative of the economy as a whole in 1947 than it is now, peaked at 22 percent.

But the inflation didn’t last. It didn’t end immediately: Prices kept rising rapidly for well over a year. Over the course of 1948, however, inflation plunged, and by 1949 it had turned into brief deflation.

What, then, does history teach us about the current inflation spike? One lesson is that brief episodes of overheating don’t necessarily lead to 1970s-type stagflation — 1946-48 didn’t cause long-term inflation, and neither did the other episodes that most resemble where we are now, World War I and the Korean War. And we really should have some patience: Given what happened in the 1940s, pronouncements that inflation can’t be transitory because it has persisted for a number of months are just silly.

Oh, and for what it’s worth, the bond market is in effect predicting a temporary bump in inflation, not a permanent rise. Yields on inflation-protected bonds maturing over the next couple of years are strongly negative, implying that investors expect rapid price rises in the near term. But longer-term market expectations of inflation have remained stable.

Another lesson, which is extremely relevant right now (hello, Senator Manchin), is that an inflation spurt is no reason to cancel long-term investment plans. The inflation surge of the 1940s was followed by an epic period of public investment in America’s future, which included the construction of the Interstate Highway System. That investment didn’t reignite inflation — if anything, by improving America’s logistics, it probably helped keep inflation down. The same can be said of the Biden administration’s spending proposals, which would do little to boost short-term demand and would help long-term supply.

So yes, that was an ugly inflation report, and we hope that future reports will look better. But people making knee-jerk comparisons with the 1970s and screaming about stagflation are looking at the wrong history. When you look at the right history, it tells you not to panic.

Unquote.

What news people should be extremely worried about is the Republican Party’s attack on democracy and majority rule (but that wouldn’t be “balanced”).

They Should Be Talking About the Coup Memo

Stephen Colbert, Jimmy Kimmel and Seth Meyers had something in common this week. They mentioned a memo given to our former president showing how he could try to stay in office after losing the election. The news divisions of ABC, CBS, NBC and of course Fox didn’t mention it at all. Reporters for The New York Times only got around to mentioning it yesterday in the final paragraphs of a story about the Arizona “audit” fiasco.

From Tim Murphy of Mother Jones:

There was big news this week on what is known ominously and euphemistically as “the democracy beat,” and like all such news, it was bad.

On Tuesday, CNN published a two-page memo written by a lawyer for then-President D____ T____’s re-election campaign during the run-up to the January 6 certification of the Electoral College results. In six concise bullet-points, the memo outlined a process by which Vice President Mike Pence could use his powers on January 6 to throw out the electors from seven states that President Joe Biden won in the 2020 election. The plan counted on Republicans in those states to submit competing sets of electors, based on the false and fabricated premise that T____ had somehow won those states.

The memo’s author, John Eastman, is a lawyer—at the time, he was even a tenured professor at Chapman University School of Law—but what he created is not a legal document. It is by its nature extra-legal: It is a blueprint for a coup.

Eastman anticipated the possibility that some people would be mad. “Howls, of course, from the Democrats,” he predicted in bullet-point four, immediately following the line, “Pence then gavels President T____ as re-elected.” Yeah, man, no kidding.

It is a little weird to read all these months later about something that was also plain as day at the time. Thursday marked the one-year anniversary of a Barton Gellman article in The Atlantic that laid out the strategy that T____, with Eastman and others’ help, would pursue. Mother Jones and others covered closely the efforts from the T____ campaign to throw out votes in courts and disenfranchise entire states. . . .  January 6 happened on live TV. But what was described on those couple of pages is what all the stunts and subterfuge were building up to—notes, as it were, on a criminal fucking conspiracy.

There have not been a lot of attempts to depose elected American presidents in my lifetime, though I’m only 34. Not knowing for sure what happens when you dissociate “peaceful transfer of power” from “a society entirely predicated on it,” I sort of think this is a pretty big deal. This is a break-the-glass moment, as some have said, only someone else already broke the glass and took the axe and is running around with it.

But it is not such a big deal, apparently, if you watch network TV news. On Wednesday, Media Matters’ Matt Gertz reported that the total number of minutes devoted to the story on either the morning or evening editions of ABC, NBC, or CBS News in the first two days after the memo was published was zero. “In fact,” Gertz wrote, “the only national network broadcasts to mention T____’s coup memo were the late-night variety shows hosted by Jimmy Kimmel, Stephen Colbert, and Seth Meyers.”

Americans get their news from lots of places, including from Late Night shows. And the networks are, broadly, still covering the aftermath of the January 6 insurrection, including the latest moves by the House Select Committee to subpoena former top T____ aides. But the network TV news shutout on the Eastman memo does speak to a reluctance to directly engage with this new political reality.

. . . There is something about the specific pitch of the threat that perhaps strains the capacity of some institutions to process. They’re not programmed to take on problems like this—it disturbs the comfortable equilibrium that defines a lot of political media. Republicans come on to speak to one side of things, and Democrats come on (slightly less often) to speak to the other side of things, and there are arguments, and sometimes people win and sometimes people lose. But there is always, basically, a sense that everyone is sort of acting within the constraints of the same known universe. There are scandals, too. (In fact, that universe thrives on scandal!) But those scandals never really veer into the realm of the existential. 

But what happened at the close of T____’s presidency, and seems likely to happen again if we continue mostly ignoring it, is an existential problem. There’s no equilibrium here. A majority of Republican members of Congress supported an effort to overturn the election. They’re almost all still in office. A majority of the country’s Republican attorneys general backed that same plan. . . . They’re all still in power as well. . . . The people who thought that the biggest problem with January 6 was that the game wasn’t fixed sooner are strengthening their grip on the GOP and on institutions of state and local government, and everyone else with a future in the party is getting out of their way.

The day of the insurrection at the Capitol, I remember thinking—naively but in my defense very angrily—that there might even be expulsions from Congress as a result, that those complicit would have to pay. I might feel better now if anyone had. But while there were howls, of course, from Democrats, such chatter quickly died down on Capitol Hill. The only people who have suffered any recriminations are the Republicans in Congress who, however belatedly, stood up to all this. Last week, Indiana Rep. Anthony Gonzalez, one of just 10 House Republicans to support impeaching the president for inciting the insurrection, announced his retirement, citing the “toxic dynamics” within his party. Gonzalez’s personal security budget had gone up since the vote, and he was being challenged by a former T____ aide, Max Miller. The ex-president had already come to the district to campaign against him.

This is all an enormous crisis of legitimacy for a large swath of government at many different levels, which means it’s an enormous challenge for political media and everyone else. I don’t really know how we get out of it. But I guess I’d start with acknowledging the fact that the axe is missing.

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