America’s economy is producing some of the best outcomes in recent decades, but we wouldn’t know it from media reports. That was the view of Aaron Brown, writing in Real Clear Markets.
The Census Bureau’s Income and Poverty in the United States report for 2018 revealed real income gains, real growth and a real prospect of better outcomes, Brown wrote. But the media worked hard to find ways to undermine the progress.
Moreover, the poverty rate fell from 12.3 percent to 11.8 percent, and childhood poverty fell even faster. On net, Brown wrote citing the report, 1.4 million people climbed out of poverty.
Contrary to accusations President Trump’s tax plan was designed solely to benefit the rich, Brown wrote that not only was income in the bottom 80 percent of households up significantly but that the only income group to see a decline was the top 20 percent. The Gini coefficient, which measures income inequality, moved down from 0.489 to 0.486 – which indicates less inequality.
This marks significant progress because the Gini coefficient fluctuates along with the stock market – pay for top earners goes up, and executives with stock options and profit shares, Wall Street types and those dependent on bonuses – and the stock market is up 25 percent since President Trump took office.
Brown wrote that “2018 worked for everyone. The economy did well, all the real measures of economic well-being were improved, and the Gini coefficient went down.”
But that’s not what the headlines said. Brown pointed to three that were especially deceptive:
- Bloomberg wrote “Census Says U.S. Income Inequality Grew ‘Significantly’ in 2018,” and its reporter blamed it on “the impact of President Donald Trump’s end-2017 tax bill, which was reckoned by many economists to be skewed in favor of the wealthy.”
- Business Insider wrote “US income inequality jumps to highest level ever recorded” and quoted a professor saying, “Wages remain low, there is a lack of childcare for single-parent families, and so on.”
- The AP headline read: “Census: US Inequality Grew.”
How did they say inequality grew when Brown said it didn’t? Because the 5-year Gini covering 2014 to 2018 was higher than the five-year Gini covering 2013-2017, Brown wrote. “The increase happened from 2016 to 2017, so it’s old news today,” Brown wrote. Others said the year-to-year increased, but they used a figure for 2017 that had to be revised because the methodology for computing the Gini changed.
Brown wrote that the rich realize gains in their personal pocketbooks from good economic times quicker than the rest of us because they quickly benefit from better investment returns and salaries and bonuses that are sensitive to economic conditions. Benefits for the bottom 80 percent are seen in more jobs and higher wages after about a year lag, but they last longer – usually about three years – Brown wrote.
But the real story, he wrote, was how the media used one distorted number to make negative claims about the economy when it is in fact booming.
“It’s hard to imagine a better Census report whether your main concern is overall economic growth or how the poor and middle class are doing relative to the upper-middle class and rich,” he concluded. “If these are the headlines for this kind of report, imagine what we’ll see when the economic news is only average, or grim.”