July 25, 2024
I don’t have the answer to that question, but if I was CNN’s pollster I would be concerned. They just did a poll on households’ financial situation and the responses they got are clearly out-of-line with a number of different independent data sources.
For example, the poll found that 35 percent of people said that they had to take on extra work to make ends meet. But the Bureau of Labor Statistics’ survey of households finds that just 5.1 percent of workers report being multiple job holders, the same as the year-round average for 2019 before the pandemic.
Furthermore, 36 percent of the people who report that they have multiple jobs also say they do telework. This indicates that many of the multiple jobholders have a second job because they have increased opportunities, not just out of necessity.
Unfortunately, this is not the only item in CNN’s poll that seems radically out of line with independent data sources. The poll finds that 69 percent of people cut back on extras and entertainment. But, this contradicts Commerce Department data showing that real (inflation-adjusted) spending at restaurants is up by 1.7 percent from last year and 10.7 percent from the fourth quarter of 2019 before the pandemic. Real spending at fast-food restaurants is up 2.1 percent from last year and 11.8 percent from before the pandemic.
Real spending at hotels and motels is up by 9.9 percent from last year and 7.4 percent from before the pandemic. Real spending at spectator sports is up 9.9 percent from before the pandemic, although it’s down 7.0 percent from last year. (There was a big jump in the second quarter of 2023 for some reason.) Spending on air travel is up 9.0 percent from last year and 49.5 percent from before the pandemic. This also fits travel data from the Transportation Security Authority (TSA) showing record numbers of people going through security checks.
Purchases of sports equipment and recreational vehicles is up 26.7 percent from before the pandemic, although down by 2.2 percent from last year. Spending on video and audio equipment is up by 50.2 percent from before the pandemic and 5.5 percent from last year.
These are areas that we might think of as “extras,” but in every case real spending is well above the pre-pandemic level and in almost every case considerably above the year-ago level. If the 69 percent of the people in the CNN poll who report cutting back are accurately describing their behavior, then the other 31 percent must be spending like crazy.
Source: Bureau of Economic Analysis and author’s calculations.
CNN also reports that 41 percent of respondents say they have cut back their driving. By contrast, the Commerce Department data show that gas consumption is up by 1.8 percent from before the pandemic, although it is down 0.5 percent from last year. Before making too much of that year-over-year drop off consider that there were 1.1 million electric vehicles sold last year, 2.0 million hybrids, and 0.2 plugin hybrids. This means we could have seen more cars on the road with less gas being used, which is basically what the American Automobile Association (AAA) found in its surveys.
We know that we have huge a problem with inequality in this country, but that doesn’t seem to offer much of an explanation. After all, do we think it’s plausible that the rich suddenly started eating much more fast food since the pandemic and driving everywhere around the country?
We know that jobs are relatively plentiful. The unemployment rate has risen somewhat in the last 14 months, but it is still unusually low at 4.1 percent. Furthermore, wage increases at the bottom end of the wage distribution have far outpaced inflation, so this is not consistent with low-income workers feeling especially stressed right now.
To be clear, we know that tens of millions of people are struggling to make ends meet and that many are falling short, going hungry and/or losing housing. But this was the story before the pandemic also, when most people were positive about the economy.
In short, the data on people’s spending patterns does not seem consistent with what people are telling CNN in its poll. I’ll let CNN figure out why there would be this discrepancy, but I am inclined to trust the data on retail sales, which come from a variety of different sources, and are confirmed by independent sources like TSA and AAA, than the answers CNN got in its poll.
Comments