'Evening News' Distorts Severity of Food Inflation by Reporting Only Highest of Increases
Although the economy is showing only a slow rate of growth, consumer spending actually showed an increase for the month of March. But, don't be fooled - that's a bad sign, according to "CBS Evening News" anchor Katie Couric.
"[T]he government reported today that consumer spending in March shot up twice as much as economists were expecting, and it's not because we're buying more - it's because the prices are so much higher, especially food," Couric said on the May 1 broadcast.
However, crediting consumer spending growth, up 0.4 percent according to the Commerce Department, to food inflation is not accurate, according to economist Dr. John Lott.
"The first notion that somehow you could explain the entire increase in consumer spending is due to higher prices - if you double consumer spending, the only way that statement would make sense is if the price level doubled in a month," John Lott told the Business & Media Institute on May 2.
Couric also cited a Labor Department statistic that food prices have increased 5 percent annually. But, CBS correspondent Mark Strassmann reported only on food items with much more significant increases in prices.
"Just in the last year, prices of America's food staples have skyrocketed," Strassmann said. "Flour now 49 cents a pound, is up 36 percent; eggs at $2.20 a dozen, up 35 percent; milk - $3.78 a gallon, up 23 percent; and pasta at $1.08 a pound, up 19 percent. Fruits and vegetables are also up double digits."
As Lott pointed out - the segment didn't look at the whole picture and that distorts what the reality of the food inflation is.
"When you're talking about all food, you're not spending it all on pasta," Lott said. "Some portion of it is going up, but oranges have fallen by like 35 percent. You have drops in the price of lettuce and other things, too. An the average on the course of a year is going up about 5 percent - that's the relevant number, what's happening overall with the cost of food, not particular parts of the basket because nobody goes and spends on just those things that are going up."