The writing of Howard Schneider has ticked off Kevin Drum. It would have helped had Mr. Schneider bothered to tell his readers upfront that the consumer price index was 0.6% higher in November than it was in October. That way, the following gibberish might have actually made sense to a savvy reader:
New data from the Department of Commerce showed that consumer spending increased 1.1 percent in November compared with the month before on a seasonally adjusted basis – more than analysts expected and a sign that consumers had not yet been discouraged by rising energy prices and a slumping real estate market. Incomes also rose in November, by 0.4 percent, double the rate of increase in October, although that was more than offset by increased prices, the department reported. Discounting for inflation, disposable personal income – the money left to spend after taxes – fell 0.3 percent.
Maybe a shorter and clearer passage would have gone something like this:
Real consumer spending rose by 0.5 percent in November despite a 0.3 percent decline in disposable personal income. With consumption increasing despite the drop in income, personal savings declined.
While Kevin notes that Mr. Schneider waited until paragraph #10 to state the obvious fact that personal savings declined, how can something that is true by definition be the “primary driver”? In fact, this article does not identify any causal factors that would lead one to think that the private savings schedule shifted inwards.
I think Kevin’s ire is well placed. Is the Washington Post this pathetic to let someone who knows little about either economics or writing work for them? Please!