Core inflation hit a record low last month, a warning sign that the economy could be heading toward Japan-style deflation.
How do the papers play it? Does it jibe with my impression, as I noted the other day, that papers are much quicker to play up signs of inflation than signs of deflation? Mostly, alas.
The New York Times almost completely misses the story, burying it in the eighth paragraph of a stock-market-was-flat story on B12. That is a big miss. Meantime, it has a B1 story on inflation—in China.
Here’s the lede of its B12 piece (emphasis mine):
Stocks were little changed on Wednesday as concerns about debt problems in Europe persisted, and new reports showed inflation remaining low and the housing sector in the United States remaining weak.
That’s one way to put it. Price increases hit their lowest pace ever (since records began fifty-seven years ago), and you stuff it in a story headlined “Wall St. Barely Budges Amid Concerns for Europe”? Are you kidding me?
First, these “stocks went up/stocks went down” stories are almost always virtually worthless. Unless there’s a significant move (think by at least 2 percent or so), it’s mostly random noise nobody cares about. When “Wall Street Barely Budges,” as the Times headlines it, it’s even less newsworthy. The disinflation story is the big news and “Wall Street Barely Budges” is what you stuff in the eight graph.
This is a story that the Financial Times correctly saw fit to lead its paper with today under a big headline saying “Core US inflation slowest on record.” The FT also notes in the lede that the news bolsters the Fed’s case for printing money with another round of quantitative easing. Applaud the FT for giving the big news of the day big play.
The NYT can’t get to any of that Fed stuff in the one paragraph it gives this news, nor in a separate story actually devoted to how the Fed is defending QE2.
The Washington Post also misses big time. It drops the inflation news into the third-last paragraph of an A18 (the first page of its business “section”) headlined “U.S. regulators probing foreclosure practices.”
The Wall Street Journal splits the difference between the two camps—leaning toward the FT side—putting its CPI story inside on the bottom of A4, though it’s good to lead off its page-one Business & Finance column with it. Two days ago, when there was a hint of bond prices rising in the wake of the QE2 announcement (to a record—for the last three months), though, that story led the paper.
But today’s is a good piece, (given more space than the FT’s, naturally), mentioning that the data boosts the Fed’s QE2 argument and that conservative critics are at the same time carping about inflation.
Which (unfortunately) brings Sarah Palin to mind. The headline number of 0.6 percent year-over-year core inflation doesn’t include volatile food prices. They were virtually flat.
And I criticized the press two days ago for its reporting on commodities, zooming in on reports by Bloomberg and The New York Times emphasizing how soaring cotton futures mean hikes for clothes prices. So it’s interesting to see this from The Wall Street Journal (emphasis mine):
Clothing prices fell for the third consecutive month in October, by 0.3%, while prices for used cars and trucks dropped 0.9%.
Here’s where I reiterate what I said in that commodities post about why the press seems to be biased toward inflationary reports:
Like Krugman, it’s my impression (completely unquantified, I concede) that the press is much quicker to trumpet signs of rising inflation than it is to focus on falling prices. Perhaps it’s a psychological quirk: We’re quicker to notice the price of orange juice going up at the grocery store than we are to notice the price of milk going down (or staying the same and being deflated by overall inflation).
But it has political consequences. The inflation argument dovetails neatly with the argument for government austerity. The deflation one tends to call for more government intervention.
Surely The New York Times is reading its own bloggers Paul Krugman and Catherine Rampell. If it’s not, here’s a couple of posts it should print out and tack up around the business desk (as should the WaPo and the LAT). Rampell has this chart, that shows the disinflation trend:
And here’s what Krugman says:
But I have a question here: why do economic forecasters keep predicting a near-time rise in core inflation, even though they are also predicting high unemployment?
I don’t really understand this, except as a fundamental unwillingness to face up to the Nipponization of the US economy.
And try an (admittedly imperfect) thought experiment: What kind of play would you give the story if core inflation hit the highest level in fifty-seven years?Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum. Tags: Deflation, Financial Times, QE2, The New York Times, The Wall Street Journal