It's more than a little annoying to read a news report containing incomplete information. The irritation level hits the red zone when you realize that the writer is not only concealing important data, but telling you what you're supposed to think about what little he deigned to tell you.
Such was the case with Martin Crutsinger's Associated Press item about the Consumer Credit report issued today by the Federal Reserve. Crutsinger only told us how much debt levels increased without bothering to tell us what those debt levels are -- something a similar AP item in 2004 at the same point in a presidential reelection cycle was eager to disclose. Additionally, Crutsinger framed today's reported expansion as good news while Eileen Alt Powell's January 6, 2004 report framed expanding credit as dangerous. First, several paragraphs from Crutsinger's report (boots-on alert: it gets really, really deep):
Consumer borrowing surges as economy improves
Americans are feeling confident enough in the economy to go back to a time-honored tradition - taking on a little extra debt.
Consumer borrowing surged in November by $20.4 billion, the Federal Reserve said Monday. That's the largest monthly gain in a decade.
Consumers took out more loans to buy cars and swiped their credit cards frequently to purchase holiday gifts.
The Fed's category that measures credit card debt rose by $5.6 billion, the most since March 2008. Its gauge that tracks auto loans increased $14.8 billion, nearly matching July's gain that was the biggest since February 2005.
The third straight monthly increase in overall borrowing marks a departure from the more thrifty habits practiced during and immediately after the recession, when credit tumbled and the savings rate climbed.
Many Americans are taking on more debt after seeing the unemployment rate drop and the economy improve, albeit modestly.
Consumer confidence is up, holiday sales were solid and the U.S. auto industry is coming off its best two sales months for the year.
And all is right with the world. Zheesh.
Crutsinger never told readers that total consumer debt came in at $2.478 trillion in November, up a full 25% from the $1.98 trillion October 2003 level the AP's Ms. Powell noted in January 2004. After adjustments for population growth and inflation, per-household consumer credit is still barely lower per household than it was eight years ago -- only this time, consumers don't have a lot (or in any cases, any) home equity on which to lean.
You could make a case that the credit expansion is borne of desperation. What I'd prefer is that Crutsinger just tell me what happened with all the relevant numbers and shut up about what it means. Y'know, just report, and let us decide.
In 2004, Ms. Powell was just as bad in the other direction, telling readers that growing consumer credit was a oncoming disaster. Some snips:
- "lower-income families without that option (i.e., to refinance homes -- Ed.) are finding it harder to cope.
- "Howard Dvorkin, president of the nonprofit Consolidated Credit Counseling Services in Fort Lauderdale, Florida, (said that) 'No we've got an entire generation that doesn't know anything about thrift and careful spending. It's tearing the fabric that's making this country great.'"
- "In the long run, it's a ticking time bomb," (Sun Wong) Sohn (a quoted expert -- Ed.) said.
Ms. Powell used her report as an opportunity to describe the situation of an affected couple, and could possibly defend her work as expanding what she found to others facing predicaments similar to that couple. Crutsinger's report today has no such defense, as he didn't speak with any consumers (What would they have told him, "We're just thrilled to be borrowing more on our credit cards in this still-pathetic economy"?).
Ironically and you can't make this up, Crutsinger consulted the same Sun Wong Sohn who spoke ominously of a "ticking time bomb" to Ms. Powell eight years ago. Now, with consumer debt at essentially the same level, home equity decimated, and the economy growing anemically -- especially compared the final three quarters of 2004, when annualized growth averaged 4.6% -- Sohn is nowhere near as worried, even saying, in Crutsinger's words, that "the increase in consumer demand (caused by more borrowing) should prompt businesses to hire more workers. Those gains would allow consumers to finance their spending with rising incomes." That's a pretty bizarre observation, given that incomes have been falling and have shown no signs of getting back up.
But the main point is that we would be better served if journalists like Crutsinger would stick to reporting facts instead of crowding them out with spin. Alas, that's far too much to hope for. As demonstrated, the AP spins similar news in a negative manner if an incumbent Republican facing reelection is in the White House, while going positive if that incumbent is a beloved Democrat.
Cross-posted at BizzyBlog.com.