Cavuto elicited this stunningly out-of-touch statement from Krugman about the situation for the average person and the middle class that is obviously not true (excerpt is at the end of this Hot Air clip):
Cavuto: .... You're saying that it's somehow dramatically worse now than it was 10 years, 20 years ago?
Krugman: It is dramatically worse now than it was 10 or 20 years ago.
Horse manure, Paul, and here's the proof. The figures below are from the Census Bureau, and show real (inflation-adjusted) income from 1985-2005 (bottom half of data at linked page):
Paul, you're supposedly a smart guy, so follow me here:
Additionally, since these are gross income (pre-tax) figures, the following points must be made:
A recent Global Insights analysis concludes that Wal-Mart’s 1985-2004 expansion of sales resulted in a 9.1% drop in the price of food at home, a 4.2% drop in the price of other goods and commodities, and a 3.1% decline in consumer prices overall, saving the average working family about $2,329 per year. And with that came a net increase of 210,000 Wal-Mart jobs in 2004 alone.
That $2,329 is a very big percentage of the income of the bottom two quintiles, and turns what appear to be relatively nominal gains in those income groups into undeniably major improvements. UPDATE (added 11:15 p.m.): Even if the lower quintiles spend substantially less on average on the items involved, the dollars saved are still going to be a pretty high percentage of the $2,329 (after the all, the items described are usually referred to as “necessities).
Krugman is the economist New York Times readers rely on for information on what is really happening in business and the economy. Chalk up this area as yet another in which Times readers are very poorly served.
Cross-posted at BizzyBlog.com.