The wrong people are telling the story of the economy

It's obvious why people are in such a sour mood about their finances, unless you aren't a person who is sour about your finances.

Photo by Samuel Regan-Asante on Unsplash

I’m not the right person to tell the story of the U.S. economy, but I am the right person to write about how the wrong people are telling the story about the economy.

The biggest disconnect in our current state of affairs in this country is between how strong the economy allegedly is (or at least was a few days ago … more on that in a minute) and what it really feels like for most people.

And the biggest problem in that is that those who analyze and try to explain the economy are not the ones who are struggling.

This is a disconnect that dominates many aspects of journalism, but this is not the joking “you never played the game” teasing that I get from friends as a sports writer who is not an elite athlete.

This is a skin in the game problem that shows up glaringly with politicians and in mainstream national writing about money and the economy.

Consider this informative yet flawed piece in The New York Times, which came out earlier this week — actually a couple of days before the tariff announcement sent things further into disarray.

The headline and subhead were encouraging: “America Has Never Been Wealthier. Here’s Why It Doesn’t Feel That Way. A surge in U.S. wealth has been driven by stock and home values. But the gains are concentrated at the top, leaving others in a sour economic mood.”

Again, there is some strong data and reporting. I’m not necessarily faulting the journalist or the editor for the fundamental information presented, but I am questioning the framing and assumptions that went into the tone of the findings as well as who is allowed to dictate the story.

One excerpt:

Over the past four years, the University of Michigan’s monthly survey of consumer sentiment has shown those in the bottom two-thirds of income to be deeply pessimistic about the economy — with rock-bottom ratings more common during periods of deep recession, including the 2008 financial crisis.

But in the preceding paragraph, the difference in how wealthy Americans and poorer Americans are experiencing the modern economy is described as a “gap in perceptions along income lines.”

That is to suggest in some way that what lower-income Americans are experiencing is more of a feeling than a reality — that they are perceiving some problem that higher-income Americans aren’t perceiving.

What might they actually be experiencing? Oh, I don’t know, let’s read a little further in the article.

In a recent report, Matt Bruenig, the president of the People’s Policy Project, a liberal think tank, evaluated the long-running question in U.S. economics of how many adults are living paycheck to paycheck — a term plagued, he said, by “inherent ambiguities.” Drawing on data from the Survey of Household Economics and Decisionmaking, conducted annually by the Federal Reserve Board, Mr. Bruenig noted that “if we define someone as living paycheck to paycheck if they either say they do not have three months of emergency savings or say they cannot afford a $2,000 emergency expense,” then 59 percent of American adults are “living paycheck to paycheck.”

I read that and started screaming at the screen.

This is the story! This is not one of a handful of possible explanations, all quickly glossed over or given equal weight! This everything you need to know!

Three-fifths of U.S. adults are living paycheck to paycheck. I am not one of them. Maybe you aren’t either. I can practically guarantee that the writers and editors form The New York Times are not among them.

I have an idea of what that might be like because it was closer to my reality growing up, but I can only guess what that feels like now. And it is clear that this piece and countless others like it have no interest in or idea of the actual lived experience of someone for whom this is the reality (and, just so we’re clear, not the perception).

The next 11 paragraphs of the piece focus on a wild theory that poorer Americans got used to the influx of COVID stimulus cash and haven’t adjusted to life without it. It concludes:

But being nudged back into tighter budgeting again, after gaining more financial breathing room, however briefly, can be “frustrating,” Chris Wheat, the president of the JPMorgan Chase Institute, noted.

I’m sure JPMorgan Chase would love to imagine it’s just a matter of budgeting that’s driving this alleged perception.

After that, we get some good data and reasoning on how home owners have seen their values skyrocket in the last decade, but that economic boost 1) doesn’t hit lower-income adults who are less likely to own homes and 2) doesn’t translate into spendable wealth if it’s tied up in equity.

Higher mortgage rates have made it harder to move from house to house or buy a first home, but they have boosted savings interest rates — again, a benefit primarily for those with money to save, not those living paycheck to paycheck.

Again, my gripe wasn’t with the data. There’s useful stuff in there. But if we truly want to understand the lived experience of lower-income Americans, they are the ones that should be telling the story of the economy.

Not the upper-middle class New York Times quoting upper-middle class economists, researchers and analysts. They know what the numbers say, but they have no idea what the numbers really mean or how they feel.

And of course all of that was before the midweek news of the trade war-inflaming tariffs that will disproportionately hurt lower-income Americans more than higher-income Americans.

Some reporting has pointed that out, but a lot of it has been fixated on the crashing stock market or the trade-offs of the privileged.

Again in The New York Times, I was sucked in by the headline “Your life will never be the same after these tariffs” and found a guest essay from Justin Wolfers, a professor of economics and public policy at the University of Michigan — an author with a PhD from Harvard and a great deal of acclaim who clearly possesses expertise but also carries a certain amount of privilege into the discussion.

He tries to make a point about the multiplying effect of high tariffs, but his notion of sacrifice has to ring hollow to a lot of folks.

Take Mr. Trump’s 25 percent tariff on vehicles, which is expected to raise their prices by roughly $4,000. Many families, like mine, will probably decide not to buy a second car. … Now, we’re constantly juggling how to get our kids to all their activities, and ourselves to work, with only one set of wheels.

The struggle is … well, it’s something. I mean, give the Times credit for knowing their audience, I suppose. It continues:

And it’s not just cars. These are across-the-board tariffs, so they will distort virtually every purchase you make. In each case you’ll have to stop your baked-in calculations, recalibrate and find a way to make do — perhaps substituting frozen vegetables for fresh vegetables, a less effective medication for a higher-priced import, or corn syrup for sugar. And in each case, you’re worse off.

One analysis suggests that the tariffs will cost Americans about $3,500 a year — roughly $300 a month.

That’s a meaningful but not life-changing amount of money in our household, and I would guess the same is true for the guest essay writer. Maybe we will buy less junk for ourselves and kids on Amazon (something that would actually make me happy, not sad). Maybe we’ll think twice about ordering takeout. This summer, we will probably drive on a family vacation instead of flying.

The point is, we have numerous levers to pull and choices to make that impact our decisions but not really our lives.

But this was clearly not written for the person for whom $300 a month is life-changing. That’s the person whose budget is already stretched beyond thin, who might have taken on credit card debt to pay for an emergency, who might have lost a job or had some other major setback.

That person might look at $300 less in purchasing power every month and wonder how to feed a family — not whether they have to buy frozen vegetables instead of fresh or are wondering how they are going to manage the logistics of soccer practice and piano lessons without a second car.

The (alleged) goals of these tariffs: balance trade and bring manufacturing jobs back to the United States.

That’s magical thinking and dubious policy, but it does recognize the gutting of the middle class that was accelerated by the loss of steady jobs with decent wages that didn’t require a college degree.

If you asked the people who lost those jobs what they really miss, it probably isn’t in many cases the work itself. It was the thing many of the privileged class now take for granted: the dependability of their paycheck and what it represented in their ability to build lives.

The economy isn’t working for them, just as it isn’t working for a three-fifths majority of adult Americans living paycheck to paycheck.

And they are the ones whose stories we need to hear.