The business press's ability to keep up the appearances of "recovery is just around the corner" for over 5-1/2 years has been simultaneously amazing and disgusting.
One of their strategies has been to define a "new normal" which is only presented that way because everyone knows deep-down that as long as the left controls economic policy, the nation's economy won't ever really get any better than it currently is. Another involves lowering the bar. An example of that would be the ridiculous new definition of full employment as representing an unemployment rate of 5.5 percent. A third tactic, demonstrated in a Thursday Bloomberg report, is to feign ignorance.
Reporters Craig Torres and Michelle Jamrisko absurdly described what they claimed is an "American Mystery Story: Consumers Aren't Spending Even In a Booming Job Market; America's most reliable economic engine is behaving strangely."
Incredibly, the pair didn't include a single word about flat wages or still-depressed household incomes, but they managed to go to that tired old standy — the weather (bolds are mine):
It's an American mystery story: More people have jobs and extra pocket money from lower gas prices, but they aren't buying as much as economists expected.
The government's count of how much people shelled out at retailers fell in February for a third consecutive month. Payrolls are up 863,000 over the same period.
... "The expenditures that add up to gross domestic product are coming in a lot softer than employment," said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC. "Why would retailers be hiring if sales are falling? Why would they be boosting hours if sales are falling and why would they be paying more?"
... Ben Herzon, a senior economist at Macroeconomic Advisers LLC, isn't that worried yet. As usual, the data is quirky. First, he notes, "it was crazy cold in February." Aside from stocking up on milk in the snowstorm, staying indoors was probably a more attractive option for most shoppers. Purchases at online retailers in February showed a 2.2 percent increase, the largest since March 2014.
... "Payroll employment has been great, and it is generating a lot of labor income that you think would be spent," Herzon said. "March should be a rebound. Our story would be wrong if it doesn't happen."
C'mon, guys. You can't be that dense.
People aren't spending because they don't have the money to spend, and are reluctant to incur new debt. Many of them who have enrolled in Obamacare have come to realize that they would have to pay out huge deductibles and co-pays if they ever got seriously sick, and have chosen to try to save money to cushion against that possibility.
Meanwhile, household incomes as of six months ago were still 8 percent lower than they were in 2007. Since then, as Sentier Resarch's latest graph shows, there has been some improvement. But excuse the average American consumer for being skeptical that it's going to continue to improve, or even avoid going into decline again. President Obama himself said in January with seeming relish that the low gas prices of the past several months aren't going to last.
Additionally, there is some evidence that real "labor income" income gains of the past several months have almost all gone to managers and supervisors, i.e., better-paid people in the upper 20 percent or so of incomes, while leaving line and everyday workers flat.
None of this should be a "mystery" to business beat reporters like Craig Torres and Michelle Jamrisko; if it really is, they need to find another line of work.
It is not at all unreasonable to contend that the Bloomberg pair knows darned well what the problem is, and that they're feigning ignorance out of reluctance to expose the truth. How sad.
Cross-posted at BizzyBlog.com.
