Money Illusion at the AP
Is Lawrence Kudlow writing copy for the AP:
Consumers bolstered their spending in May as their incomes grew solidly, an encouraging sign that high gasoline prices have not killed people’s appetite to buy. Inflation moderated. It was the second consecutive month that consumer spending went up by 0.5 percent, the Commerce Department reported today. Incomes, the fuel for future spending, rebounded in May, growing by 0.4 percent.
I suspect they were looking at current dollar increases reported here. Just below the nominal increases is reported the real increases as in “chained (2000) dollars. As Dean Baker notes:
Real consumption spending grew by just 0.1 percent in May and real disposable income fell by 0.1 percent.
When the nominal increase in income is less than the increase in the price-level, most people know that real income has declined. But just in case one is an idiot, the BEA already reports the real change. Whoever wrote this copy for the AP should have picked up on this when reading the report. It’s not exactly rocket science. OK – Kudlow makes this stupid mistake routinely, but one would hope the AP would have higher standards than the National Review.