Economic news on Wednesday's pre-Thanksgiving "Getaway Day" was largely dismal. The government's report on October's personal income and outlays headed up the disappointing news. While incomes increased nicely — at a rate which needs to be repeated about two dozen more times before it can be seen as genuinely impressive — spending only rose by 0.1 percent, while prior months were revised significantly downward.
Perhaps because they were all in a pre-holiday hurry, the headline writers at the Associated Press and AP economics writer Martin Crutsinger had fundamentally different takes on the news. Additionally, Crutsinger was apparently in such a rush that he didn't worry about the fact that his first two paragraphs' characterizations of the result disagreed. Finally, the AP reporter failed to note that total consumer spending in October was lower than what was originally reported in September after the previously mentioned downard revisions.
Here are the headline and opening two paragraphs from Crutsinger's report:
The AP's headline got it right. The result was very weak — so much so that it motivated the Atlanta Branch of the Federal Reserve and Moody's to lower their respective fourth-quarter economic growth predictions from an annualized 2.3 and 2.2 percent to 1.8 percent and 1.7 percent. In other words, even before worrying about potential large hits to growth from long-overdue inventory-trimming, the fourth quarter is not looking good at all.
Crutsinger's characterization of the 0.1 percent increase in his opening paragraph as "modest" is wrong. Repeating that 0.1 percent for 11 more months would yield a 1.2 percent full-year increase, the lowest result since the most recent recession. Annual consumer spending increases have been lower than 1.2 percent only five time since 1947.
The AP reporter's switch to "tiny" in the second paragraph was better — and, to be clear, "tiny" is not a listed synonym for "modest."
How "tiny" was the October increase? So tiny that, at an exactly calculated 0.059 percent, it barely escaped getting officially reported as a goose egg. It was also so tiny that it failed to make up for prior downward revisions, leaving total spending in October over $5 billion less than what was orignally reported in September (figures are expressed in billions of chained 2009 dollars, seasonally adjusted at annual rates):
Crutsinger, as a dutiful employee of the Associated Press, aka the Administration's Press, failed to even mention the existence of the prior-month revisions.
Cross-posted at BizzyBlog.com.
