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Record Inequality and Corporate Profits Are What Media Call a ‘Strong Economy’ ([link removed])

by Joshua Cho
CNBC: The Hard Data Says the US Economy Is Just Fine

Who are you going to believe, "hard data" or your lying eyes (CNBC, 10/7/19 ([link removed]) )?

Last month, CNBC (10/7/19 ([link removed]) ) reassured us that fears of a potential recession are "overblown," because the "hard data" shows that the "US economy remains strong."

If you’ve been keeping track of corporate media coverage of the US economy over the past several years, you might have noticed a contradictory pattern. You’ll find that corporate media make ubiquitous references to a “strong economy,” while simultaneously providing many reports on the increasingly impoverished and precarious working class alongside the continuously rising fortunes of the rich.

Last month, a New York Times report (10/20/19 ([link removed]) ) exemplified this seemingly bizarre practice when it wondered why so many workers are striking when we apparently live in such a “strong economy,” because the piece also discussed how “today’s strikes are fueled by a deeper sense of unfairness and economic anxiety.”

Even though corporate media are now warning us not to be too complacent because of a potential imminent recession and slowing GDP growth (CNN, 8/18/19 ([link removed]) ; Wall Street Journal, 10/30/19 ([link removed]) ), references to a “strong economy” and an “economic recovery” from the Great Recession still abound.


Three years ago, the New York Times (12/2/16 ([link removed]) ) remarked that former President Barack Obama was handing off a “strong economy” to President Donald Trump, even as it noted that “tens of millions of Americans understandably feel that the recovery has passed them by.” Two years later, Times columnist David Brooks (11/29/19 ([link removed]) ) led off a column by declaring, “We’re enjoying one of the best economies of our lifetime.”
LAT: The economy is thriving — but that may not be enough to get Trump reelected

LA Times (5/3/19 ([link removed]) )

This year, the Los Angeles Times (5/3/19 ([link removed]) ) pondered the two “great conundrums” of the Trump presidency: “How does his approval rating stay so bad when the economy is so good, and what might that forecast about his prospects for reelection?”

Politico (10/15/19 ([link removed]) ) and Reuters (10/15/19 ([link removed]) ) advise us that election models are forecasting Trump’s likely reelection based on “economic trends in key swing states” under his administration, as CNN (7/5/19 ([link removed]) ) proclaimed that the “strong economy” is functioning as Trump’s “safety blanket” for his reelection chances. The Financial Times (5/8/19 ([link removed]) ) declared that “there is no doubt that the US is the strongest large economy in the world,” even as it warned that “much of the growth surprise appears temporary.”

The “strong economy” narrative is so thoroughly entrenched, the Atlantic (8/5/19 ([link removed]) ) observed that even Democratic presidential candidates are wary of mentioning “economic growth,” lest it sound like an implicit endorsement of the Trump administration’s policies. However, following slower GDP growth and recession forecasts, some Democratic presidential candidates, like Joe Biden, are changing their campaign strategies by claiming that Trump is “squandering ([link removed]) ” the “strong economy” inherited from the Obama administration, reversing their previous view of discussing the “strong economic data” as a “losing” electoral strategy (Reuters, 8/22/19 ([link removed]
VC0ZZ) ).

To the extent that there is a “debate” over the existence of a “historic recovery” and a “strong economy,” it is largely restricted to whether the economy was better under the Obama administration or under the Trump administration, and over who “really” deserves credit for this allegedly amazing economy.

The Washington Post has run several comparative articles (6/25/18 ([link removed]) , 5/7/19 ([link removed]) , 8/20/19 ([link removed]) ) arguing that Trump “inherited” the “strong economy” from Obama, even wondering if this economy is “too good to be true? ([link removed]) ” while noting that the “vital signs look solid.” CNBC (9/7/18 ([link removed]) ) declared that Trump has “set economic growth on fire,” praising a “economic boom uniquely his” as a “tremendous achievement.” The Wall Street Journal (5/5/19 ([link removed]
w.wsj.com/articles/voter-approval-rising-for-trumps-handling-of-the-economy-11557061201) ) discussed how a poll found that “select groups of Americans” who disapprove of his job performance are still willing to credit Trump for a “bustling economy,” while USA Today (7/1/19 ([link removed]) ) discussed a survey that found that the “solid economy is doing little to bolster support for President Donald Trump.” Some articles have pushed back on the idea that Trump deserves the credit for the “strong economy,” instead crediting the Federal Reserve and Congress, or a vague “broader, global trend” (New York Times, 8/8/19 ([link removed]) ; Wall Street Journal, 11/8/17 ([link removed]) ).


Common Dreams: Rejecting Trump Spin, 62% of Americans Believe US Economy Primarily Benefits Rich and Powerful

Common Dreams (4/29/19) ([link removed])

But who determines whether we live in a “strong economy,” and what metrics should we use to find out? Despite what media say, most Americans believe that the economic system is “rigged” to benefit the wealthy elite at the expense of the working class (CNN, 6/28/16 ([link removed]) ; Pew Research, 10/4/18 ([link removed]) ; Common Dreams, 4/29/19 ([link removed]) ). Do the standard economic metrics deployed by corporate journalists accurately capture and explain the feelings and economic situation of most American workers?

When one also reads the contradictory coverage found in corporate media regarding the precarious situation facing the American working class, it’s clear they don’t. Here’s a nonexhaustive catalog of facts that make elite pundits like the New York Times’ David Brooks’ declaration that “We’re enjoying one of the best economies of our lifetime” appear fatuous and puncture this myth of a “strong economy.”

Overwhelmingly, many of these reports point to GDP growth (increased annual spending on total goods and services), a low unemployment rate ([link removed]) (currently at 3.6% ([link removed]) ) and the number of jobs added to the US economy as evidence of a “strong economy.”

However, the standard unemployment rate ([link removed]) in the US only includes people with no job who have been searching for work within the past four weeks; this leaves out significant portions of the population, like the underemployed and involuntary part-time workers (those who want full-time work but can’t find any), and discouraged workers who have given up searching for a job (Quartz, 6/7/18 ([link removed]) ). This is why the New York Times (10/31/19 ([link removed]) ) found that there are still millions of people not captured in the official unemployment rate, and people having trouble finding work in this “strong economy.” The U-6 unemployment rate ([link removed]) , considered to be more accurate by economists because it includes discouraged workers and part-time workers
seeking full-time employment, is 7% ([link removed]) —almost double the U-3 unemployment rate usually cited by corporate media.

Another figure that complicates this picture of a “strong economy” is the labor force participation rate ([link removed]) (the sum of all workers who are employed and actively seeking employment divided by the total working age population). The current labor force participation rate is 63.3% ([link removed]) , 4 percentage points lower than the average of 67.3% at the beginning of the 21st century.

Although the number of involuntary part-time workers dropped this year ([link removed]) , even people who only work one hour a week would not be considered unemployed by the Bureau of Labor Statistics. A 2016 study ([link removed]) by economist Lonnie Golden found that the number of involuntary part-time workers increased almost 45% from 2007.

While there has been pushback ([link removed]) against a widely cited 2016 study ([link removed]) from economists Lawrence Katz and the late Alan Krueger, which found that 94% of job growth from 2005 to 2015 has been in precarious “alternative work arrangements” in the “gig economy,” there’s no shortage of studies and projections showing that freelancing, independent contracting and temp work for corporations like Uber are playing a larger role in the US economy, without much of the job security and benefits found in more traditional jobs (NBC, 8/31/17 ([link removed]) ; Forbes, 2/15/19 ([link removed]) ; New York Times, 8/22/19
([link removed]) ).

Critically, throughout several years of reports on this “strong economy,” there have also been numerous reports on the persistent problem of low and stagnant wages. Although there are reports indicating that workers are finally seeing slightly better ([link removed]) wage growth after decades of stagnant wages, it’s still only a fraction of record corporate profits (Washington Post, 11/2/18 ([link removed]) ).

The long-term trend of wages not keeping up with the prices of essentials ([link removed]) hasn’t improved much, as it’s been reported that minimum-wage workers can’t afford a two-bedroom apartment ([link removed]) anywhere in the US. (The Economic Policy Institute—7/19/18 ([link removed]) , 2/5/19 ([link removed]) —found that if the minimum wage tracked productivity growth ([link removed]) since the 1960s, it would now be over $20 an hour.)

Almost half of US families are unable to afford the basics like rent and food ([link removed]) , and 40% can’t afford an unexpected $400 expense ([link removed]) , with almost 80% of US workers living paycheck to paycheck ([link removed]) . Perhaps this is why increasing numbers of people are living in poverty, in cars and on the streets, despite having jobs (CBS, 7/31/18 ([link removed]) ; New York Times, 9/11/18 ([link removed]) ; Washington Post, 3/22/19
([link removed]) ). These low and stagnant wages may also be why Americans are increasingly buried in debt, as student loan debt reached $1.5 trillion last year, exceeding all other forms of consumer debt except mortgages, and auto debt is up nearly 40% from the last decade, reaching $1.3 trillion (Wall Street Journal, 8/1/19 ([link removed]) ).

One of the grimmest signs that the economy is not working for many is that US life expectancy continues to drop ([link removed]) , from a peak of 78.9 in 2014 to 78.6 in 2017. The drop is led by rising deaths from suicide, drug overdose and alcohol-related disease—known as “diseases of despair”—among men, particularly those without college degrees (Brookings Institution, 11/7/19 ([link removed]) ).


Atlantic: Government Debt Isn't the Problem—Private Debt Is

Atlantic (9/9/14 ([link removed]) )

Richard Wolff has been one of the few economists who have argued that the media’s false “recovery hype” is a “weapon of mass distraction ([link removed]) ” (Extra!, 12/14 ([link removed]) ) and observed (in Capitalism’s Crisis Deepens ([link removed] cards) ) that the finance industry’s decades-long wave of spectacular growth has coincided with stagnating wages beginning in the 1970s, as more and more Americans have to rely on debt to maintain their lifestyle and keep up with the soaring costs of essentials like housing
([link removed]) , healthcare ([link removed]) and higher education ([link removed]) . Historically, private debt—not public debt—is the harbinger of economic disaster, contrary to the obsessive focus of media austerity hawks (Atlantic, 9/9/14 ([link removed]) ; Guardian, 11/4/13 ([link removed]) ; FAIR.org, 2/22/19 ([link removed]) ).

Despite corporate media’s ludicrous “factchecks” ([link removed]) on presidential candidate Bernie Sanders’ (correct) claim that “three people in this country own more wealth than the bottom half of America” (the Washington Post argued ([link removed]) that the comparison is “not especially meaningful,” because “people in the bottom half have essentially no wealth, as debts cancel out whatever assets they might have”), journalists have consistently reported on the reality of rising prosperity of the wealthy, record stock markets ([link removed]) and soaring corporate profits ([link removed].
html) . (Of course, such stories are often presented as good news, as if higher stock prices benefited anyone other than people who own stock—Extra!, 7–8/02 ([link removed]) .)

Matt Bruenig at the People’s Policy Institute found that the top 1 percent’s net worth has increased by $21 trillion ([link removed]) , while the bottom 50% of the population saw theirs decrease by $900 billion, from 1989 to 2018. Perhaps this is due to massive ([link removed]) criminal tax evasion/avoidance ([link removed]) by the wealthy ([link removed]) and corporations ([link removed]) in overseas tax havens (euphemistically labeled “loopholes”), coupled with unprecedented tax cuts ([link removed]) for the
rich, alongside relentless ([link removed]) selective enforcement ([link removed]) and increased taxes on the working class ([link removed]) (FAIR.org, 12/6/17 ([link removed]) , 1/17/18 ([link removed]) ).

Given all this, GDP growth tells us little ([link removed]) about how wealth and income are distributed amongst the US population. It’s theoretically possible for GDP growth to be entirely accounted for by things like increased military spending ([link removed]) for a US-driven arms race ([link removed]) , corporations buying back stocks ([link removed]) and paying out dividends to further inflate their stock prices—instead of giving raises to employees or hiring more of them—and the wealthy’s environmentally destructive ([link removed]) conspicuous consumption of things
like private jets ([link removed]) and superyachts ([link removed]) , since all of them count towards GDP. Journalists shouldn’t use GDP as an indicator of economic health without further context, because growing GDP alongside skyrocketing income and wealth inequality is not evidence of a “strong” economy, but of a parasitic economy ([link removed]) .

What explains corporate media’s credulous reliance on uninformative economic measures ([link removed]) , and contradictory references to a “strong economy,” alongside reports on a struggling working class? It makes little sense if one assumes corporate journalists are primarily concerned with informing the public. It makes a great deal of sense when one realizes that corporate news outlets have an inherent interest in cloaking class warfare by equating a “strong economy” with the prosperity of the investor class, even if it comes at the expense of everyone else (FAIR.org, 10/16/19 ([link removed]) ).
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