At Politico Eugene Ludwig, appointed by Bill Clinton as Comptroller of the Currency, has an op-ed asserting that voters were right in 2024 about the economy and the data were wrong:
Many in Washington bristled at the public’s failure to register how strong the economy really was. They charged that right-wing echo chambers were conning voters into believing entirely preposterous narratives about America’s decline.
What they rarely considered was whether something else might be responsible for the disconnect — whether, for instance, government statistics were fundamentally flawed. What if the numbers supporting the case for broad-based prosperity were themselves misrepresentations? What if, in fact, darker assessments of the economy were more authentically tethered to reality?
continuing:
These numbers have time and again suggested to many in Washington that unemployment is low, that wages are growing for middle America and that, to a greater or lesser degree, economic growth is lifting all boats year upon year. But when traveling the country, I’ve encountered something very different. Cities that appeared increasingly seedy. Regions that seemed derelict. Driving into the office each day in Washington, I noted a homeless encampment fixed outside the Federal Reserve itself. And then I began to detect a second pattern inside and outside D.C. alike. Democrats, on the whole, seemed much more inclined to believe what the economic indicators reported. Republicans, by contrast, seemed more inclined to believe what they were seeing with their own two eyes.
with the following conclusion:
The bottom line is that, for 20 years or more, including the months prior to the election, voter perception was more reflective of reality than the incumbent statistics.
He goes on to show how the official statistics on unemployment, the median wage, inflation, and GDP are grossly misleading and that ordinary people’s lived experience suggests that none of those as experienced are nearly as rosy as the official statistics might lead you to believe. You may notice in his analysis some of the things that I have been saying around here.
I would point out that on some of the official statistics, particularly unemployment, his analysis just scratches the surface of the problems. My rule of thumb is that when the fudge factors used to arrive at the official statistics are much larger than the actual measured data you should suspect that something is wrong with the fudge factors.
Some of the discrepancies are undoubtedly due to preconceived notions but some are due to how different things are in the environs of Washington, DC and state capitols than in the country at large while some are due to institutional momentum.
It was an interesting article to read. I think the writer did a good job explaining some of the statistical issues with the data. One think I think he failed to emphasize is that people don’t care about total GDP. They care more about real per capita GDP as it applies to them. With the huge surge in workers from immigration, total GDP went up. Per capita GDP did not perform nearly as well. The second thing the author missed was what happened in 2019. Real wages for the bottom 20% of the workforce soared. Under Biden, they declined.
One major problem with bad data is that government actions and policies are based on them. Successful solution of problems becomes impossible.
Besides the US economy, other examples of bad data producing bad actions and policies are AGW and Ukraine. The EU is deep into a program of deindustrialization and immiseration because of the first, and the US risks nuclear war because of the second.
Hence my repeated assertions that our elites are clinically insane.
Foreign Affairs had an article recently that pointed out that spending on infrastructure declined under Biden due to inflation:
“Adding to the trouble, the administration’s laser-like focus on the demand side came at the expense of addressing impediments to supply, such as excessive obstacles to permitting processes related to building infrastructure. As a result, infrastructure suffered an even worse fate than real wages. More than half the funds in the Bipartisan Infrastructure Law dispersed to states through early 2024 went to highway and bridge projects, prompting a spike in highway spending, which rose 36 percent from mid-2019 to mid-2024. But the costs associated with construction, including asphalt, concrete, and labor, increased even more, leaving real infrastructure spending down 17 percent over the same period. In fact, the amount of federal investment in highways during every year of the Biden administration was lower than in any year from 2003 through 2020. Biden’s putative building boom was in reality a building bust.”
https://www.foreignaffairs.com/united-states/post-neoliberal-delusion
I aim always skeptical about those who dont show their work. Anyway, the idea that inflation is different among different income groups is not new. BLS, among others has documented that it was higher among low income groups, but not as high as he claims. Underemployment is measured and it is actually down. I am traveling and cant easily find data looking back over the last 20 years to see if adjusted for inflation if the percentage of people earning less that $25k has increased.
So, it’s possible he might be right about some of this. Maybe we ought to change some of our numbers, but we ought to have some verifiable numbers then follow them consistently. (As pointed out before, you are wrong about the so called fudge factors.)
I would note that the same wisdom of the crowds that believes we are worse off economically also believes crime goes up every year and that 20%-40% of the budget is spent on foreign aid.
Steve
Forgot to add this. Noah Smith and Horpendal have already gone through the numbers and they are not what the author represents. For example, if you look at his underemployed and under 25k number, that was lower during the Biden years. BLS tracks earnings for part-time workers and full time separately, rather than lumping them together, and it turns out they were higher during Biden’s years. Finally, when you look at inflation by decile and income by decile, those at the bottom had the largest gains in real income.
Steve
Averaged statistics that rely on modeling to represent aggregate patterns across tens and hundreds of millions of people will always come with some limitations regarding accuracy and utility. The averages hide a lot of what is going on under the hood. Not much attention, for example, was paid to the specific characteristics among key demographic groups, especially in swing states.
I think the overall point the author makes is sound – Democrats relied on these national statistics to try to “prove” to people that their perceptions were wrong as a way of defending Biden/Harris politically. It wasn’t just economics, but also things like crime, which isn’t just the murder rate.
The political lesson here is that pointing to averaged aggregate statistics to tell people they are wrong about their own experiences is ineffective.
Various:
“The second thing the author missed was what happened in 2019. Real wages for the bottom 20% of the workforce soared. Under Biden, they declined.”
It really is impossible for most income tiers to keep up with a significant inflation. Very situational. Its probably better to think of it as upper income tiers can maintain lifestyle easier.
“Foreign Affairs had an article recently that pointed out that spending on infrastructure declined under Biden due to inflation..”
Given that our firm has gained quite a reputation for its significant portfolio allocation to “building products,” I can tell you unequivocally that is true.
“BLS, among others has documented that it was higher among low income groups, but not as high as he claims.”
It would be far more accurate to say that inflation is primarily a function of the basket of goods and services one consumes. That there is a (modest) correlation by income tier is simply coincident. A couple examples. Here in the N GA mountains you find a majority of the population making very modest wages. However, most have long since paid off mortgages, as families have passed on homes. Chevy’s and used cars are everywhere. Clothing? You won’t go broke buying jeans and tee shirts. Food, on the other hand, is a problem. (although, you would be amazed at how many people raise chickens, pigs, and cattle, not to mention vegetables. The cost of eggs? meh)
Contrast that with people of similarly modest incomes but who live 2 hours south in N Atlanta area. High rents. Similar food inflation, but 100% store bought. Quite different experiences. This issue pertains all across the country. I could go on, but the notion of some academic study being the be all on income and inflation, vs how the public feels (and that is the point of Daves piece) is silly. BTW – Zerohedge always does a take apart when major statistics are published. Always worth a look. I note the PPI came in hot, and 2024 was – wait for it – revised upwards………..now that the election is over. Ah, yes, data integrity.
“I would note that the same wisdom of the crowds that believes we are worse off economically also believes crime goes up every year and that 20%-40% of the budget is spent on foreign aid.”
Say what? That’s just a silly assertion, Mr Show Your Work. I can only hope you and your party insist on living in denial. The early evidence is that you will. Things are not great. They just aren’t. And you don’t need an academic paper. You just got pasted in an election to a, shall we say, less than illustrious opposition candidate. May you lose the next 3.
From 60,000 feet. It will be 6 months before we can look at economic policy, results, and the current administration.
Show my work? Kaiser surveys people’s beliefs on foreign aid. Result at link where people thought the average was that we spend 26% on foreign aid. Stats on people’s beliefs about crime are also easy to find.
https://www.kff.org/global-health-policy/poll-finding/data-note-americans-views-on-the-u-s-role-in-global-health/
The revision for 2024 was not completed until after the election which occurred November, 2024. It’s hard to believe they would have to wait until the year is actually over. Clearly a conspiracy.
Andy- The other take home is the GOP is good at marketing. They weren’t telling us that specific populations might be affected. They were claiming the numbers were bad everywhere and for everyone. Anyway, averages are just averages and some will do better and some worse. That’s a known. It’s also known that people overvalue losses compared to gains. Inflation drove up prices and everyone remembers that. Many fewer will remember they also got pay raises.
Steve
As an aside, spent yesterday and part of today driving to Nashville to visit grandson and family. As is my wont I always listen to right wing FM radio. They believe that the economy is already better, the Gaza problem is fixed and Trump has achieved peace in Ukraine. It’s the marketing.
Dave, I’ve found an essay I’d like to commend to your attention:
https://www.unbundle-the-university.com/
BTW, in the good old days we avoided sending troops to Ukraine. Now Vance is threatening to send them in.
Steve
Vance is saying the WSJ mischaracterized his comments during an interview, reading the article, I think Vance has a point.
Also, what Hegseth said at the Ukraine contact group seems to reflect the official position; he was clearly reciting pre-written lines.
“We want, like you, a sovereign and prosperous Ukraine. But we must start by recognizing that returning to Ukraine’s pre-2014 borders is an unrealistic objective.
Chasing this illusionary goal will only prolong the war and cause more suffering.
A durable peace for Ukraine must include robust security guarantees to ensure that the war will not begin again.
This must not be Minsk 3.0.
That said, the United States does not believe that NATO membership for Ukraine is a realistic outcome of a negotiated settlement.
Instead any security guarantee must be backed by capable European and non-European troops.
If these troops are deployed as peacekeepers to Ukraine at any point, they should be deployed as part of a non-NATO mission. And they should not covered under Article 5. There also must be robust international oversight of the line of contact.
To be clear, as part of any security guarantee, there will not be U.S. troops deployed to Ukraine. “
WSJ has a definite right wing bent. It’s possible he was mischaracterized but more likely he was told after he said a boo boo. We see an awful lot of walking back of statements so far. If it was a CNN interview then it’s believable.
Steve
I agree that the WSJ opinion page has a slight right-leaning bias. Some of its writers are right-wing; some are centrist; some are more right-leaning than others.
If you think the opinion page and news have a “definite right wing bent”, it may say more about you than about the WSJ. See AllSides. As AllSides notes, most major media outlets have a left-leaning bias in their news coverage. Some, like the NYT, have a definite left-wing bias in their opinion pieces.
The WSJ definitely has a pro-business bias. Do you think that being pro-business is a right-wing bias? I think it’s a pro-American bias. “The business of America is business” and all that.
The WSJ opinion page used to reflect the center right more than it does today. If you read the full context of Vance’s statement about Ukraine the WSJ definitely added creative license to it, which is why Vance refuted it.
As for the economy, stats can always be played with. It’s interesting under Biden almost every month had revisions, mostly downward. However, the complicit press tends to write rosy news under a democrat regime, and then wakes up to the bad news once an oppositional regime takes the reins of power.
In all the commentary, rolling over the debt at higher rates almost never gets mentioned. But its a disaster. Janet Yellen never got anything right in Washington.
https://dailycallernewsfoundation.org/2025/02/14/venture-capitalist-tells-megyn-kelly-why-trump-admin-faces-uphill-battle-tackling-us-debt/