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Home Publications Blogs Beat the Press The Downturn Is Whacking People, But We Need Good Data

The Downturn Is Whacking People, But We Need Good Data

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Monday, 10 October 2011 04:37

People reading a front page story in the NYT might have been surprised to find that the situation of ordinary families is deteriorating even more rapidly than had been generally reported. The article tells readers that:

"Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent. "

This sounds really really bad. Of course the actual situation is really bad, but the report that is the basis for this article is extremely misleading. It relies on monthly data that are highly erratic. In particular, the horrible story for income over the last year is driven largely by an extraordinary run-up in inflation (largely driven by energy prices) that is already being reversed. Inflation rose at a 6.3 percent annual rate over the period from December 2010 to June 2011, the month for which the data is given. With hourly wages rising at around 2.0 percent annually, this implies a very bad income story.

This can be amplified by erratic monthly movements in hours, which can often rise or fall by more than half of a percent month to month. This is almost certainly due to measurement error, not actual changes in hours.

It is worth noting that there is almost no information that is freely available on the methodology used in this report. It is being sold for $20 on the web. There are many good sources for data on wages and working conditions in addition to the government data sources. CEPR provides frequent analysis of the micro data as does the Economic Policy Institute, my former employer. This data is freely available and fully transparent. The NYT should try to rely on such sources, rather than doing ads for dubious reports being sold for profit.

 

 

Comments (2)Add Comment
Credit Rating Agencies Add Whacker Misery Index for Free
written by izzatzo, October 10, 2011 8:52
The NYT should try to rely on such sources, rather than doing ads for dubious reports being sold for profit.


Worry no longer about the status of your economic welfare. Now you can know exactly.

Get peace of mind with your Whacker Misery Index updated daily along with your rotten credit score to insure you're only getting whacked by authentic whackers and not the crooked ones.

It's your personal property and we're in the business of stealing it and selling it back to you as a forced free gift bundled with your credit score.

Stupid liberals.
Counting Private Health Ins.?
written by Dadou, October 10, 2011 10:14
Just for some clarifying help, it would be nice to know if you and/or the article are including the shift of health insurance to employees during the last few years. This is a major reduction in disposable income.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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