In her columns, she writes:
The pieces just don’t add up. Credit card debt outstanding has fallen 27 straight months for a total decline of $177.2 billion. The unemployment rate has been stuck above 9 percent for 20 months. Average hourly earnings rose 1.9 percent in 2010. Personal income rose less than 4 percent in the 12 months ended November. About 23 percent of homes with mortgages are worth less than the amount of the loan. Faced with these not insignificant hurdles, what did the U.S. consumer do? Why, he spent like there was no tomorrow.
[ . . . ]
There’s another possibility that would better explain the inconsistency between weak job and income growth on the one hand and robust spending on the other.
“I think a credible case can be made that income and employment are being understated,” says Joe Carson, director of economic research at AllianceBernstein.Then Ms. Baum goes on to “prove” this by using Treasury data on withheld income tax receipts, which rose 17%. Then, in order to strengthen her case, she questions whether the Bureau of Labor Statistics—which a lot of commentators, including The Hourly G, credibly argue severely under-reports unemployment—might in fact be over-reporting unemployment.
In other words, according to Ms. Baum, with rising spending and rising Treasury tax receipts, the unemployment might really be getting better, as the recovery takes hold!
Hurray! . . . is Ms. Baum’s thesis.
All we need do is look at this Dec. 23 article—from Bloomberg, Ms. Baum’s home—to see that her thesis might be . . . well, let’s just say a bit off the mark:
Sales at U.S. Wal-Mart stores open at least a year fell 1.3 percent in the quarter ended Oct. 31, the sixth straight quarter of decline, as traffic shrank from last year.
So much for spending more.
As to earning more? Well, why is it that there are more people on food stamps than ever before? About 14% of the U.S. population, to be precise: 43.2 million people.
Maybe the well-to-do, the rich and the very rich are earning more and spending more. But the hoi polloi? The uncleaned rabble? Not so much—and just about every metric proves it.
Maybe Ms. Baum doesn’t realize it, but she does sound like a cheerleader for the ancien régime.
And we know how those poor unfortunates ended up.