Biden and Media Spin Economic Data

• Inflation increased in January by the largest percentage since last October
• Food prices continue to outpace the CPI index, rising 11.3% in the last 12 months
• Consumer debt has reached an all-time high and household savings rates have plummeted
• Despite robust wage growth, real wages are declining at a record pace 

President Biden shuffled a victory lap after the Bureau of Labor Statistics (BLS) released its Consumer Price Index (CPI) report for January.   "Inflation in America is continuing to come down, which is good news for families and businesses across the country," the president crowed to the media.

His words were dutifully mimicked by the nation's pliable media:

The New York Times: "Pace of U.S. Inflation Eases Slightly Again, Data show."'

The Wall Street Journal: "January CPI Reports Shows Annual Inflation Cooled."

The Washington Post: "Inflation Eases Again, But Bringing Prices Further Down will Take Time."

Truth is elusive even when the economic data is staring you in the face.  The lackadaisical media apparently read the headline of the BLS report and nothing else.  The CPI Index came in at 6.4%, which represents the increase in prices over a 12-month period ending in January.  

The headline number--6.4%--sounds marginally better, compared to December's 6.5%. But wait, the data shows prices increased by .05% month-over-month, the largest jump since last October. No matter what you read, inflation increased.  That's not good news for American families or businesses.

Food costs continue to spiral.  The food at home index has risen 11.3% over the last 12 months.  It climbed 0.5% in January.  Prices for major grocery staples are marching upward.  Meats, poultry, fish and eggs ticked up 0.7% in January, compared to the previous month.  

Americans household budgets also took a blow from energy prices. Gasoline prices soared 3.2% and the index for natural gas spiked 6.7% over the previous month.  Electricity prices were up "only" 0.5%, which may provoke jubilation in Washington but not among Americans grappling with inflation

Month-over-month, the CPI has increased every month since August of last year.  That fact is lost in the blizzard of news about the rolling 12-month data.  Americans are feeling the pinch with nearly two-thirds (63%) of households now living paycheck-to-paycheck, according to LendingClub. 

The other shoe dropped when the Labor Department reported that the producer price index (PPI) surged 0.7%, the steepest monthly increase since last summer.  Inflation at the wholesale level usually seeps into the retail costs for inflation weary consumers.

Wall Street likes to point out that consumers are still spending based on January's 3% hike in retail sales. But the spike reverses two consecutive months of declining sales.  Consumers are financing spending with debt. Credit card debt reached an all-time high this month: $930 billion, leaping 18.5%.  

Americans also are paying near record interest rates for debt, topping 20% on outstanding balances. With debt climbing,  savings rates, which rose to 33% in 2020, are now hovering at a paltry 2%. The data suggests consumers may be on a last gasp spending spree.

Often the administration stubbornly insists Americans are doing well because wages are increasing. Really?  The latest report from BLS shows real average hourly earnings, adjusted for inflation, dipped 0.2% in January from December.  Over a 12-month period, hourly earnings decreased 1.8%.

In fact, since Joe Biden became president wages are up 9.5%, a fact he often touts.  However, after adjusting for inflation, real wages have plunged 4.1% since 2021. Americans wages have not kept up with inflation, which explains why credit card debt is ballooning and savings rates have cratered.

Those wizards on Biden's economic team beat you over the head with the jobs numbers whenever you use the "I" word (inflation).  In the January report, U.S. payrolls added an impressive 517,000 jobs, the largest gain since July, 2022.  That appears to be good news without impartial perspective.

More Americans are working two jobs, an estimated 400,000 according to the BLS.  A second job counts as a new job in the data. Overall, the economy added an unprecedented 4.5 million jobs in 2022.  Yet there are nearly three million fewer workers in the labor force compared to February, 2020.

The Great Resignation also weighs heavily on the job data.  On average, 4 million workers quit or lose their jobs monthly. Figures for the latest month reveal 5.9 million Americans quit, were laid off or discharged. Layoffs at large and medium-sized firms have picked up steam since the fourth quarter. 

Hiring in low-paying jobs in the hospitality and leisure sector is fueling the job growth.  Since 2021, those jobs have fluctuated between 7 to 9 percent of total hiring, outpacing other sectors. The  Labor Department estimates the sector still has about one million fewer jobs than it did before the pandemic.

Simply put, all those jobs lost during the pandemic are the main reason behind the robust job data as Americans gradually return to the workforce and pandemic unemployment benefits expire.    

Americans rarely get any perspective on the data gushing out of Washington.  Relying on the media for an honest interpretation is pointless.  Household budgets are the real gauge for Americans.  No matter how the data is spun, most Americans are worse off than they were a year ago.