No Month Left at the End of the Money

No Month Left at the End of the Money

Submitted by Isaiah J. Poole on August 15, 2007 - 6:09pm.

While President Bush continues to spread sunny optimism about the economy, we keep hearing discordant news from places where the sun doesn't shine.

"U.S. consumers continue to be under difficult pressure economically," Wal-Mart's chief executive said in widely reported remarks Tuesday as he reported that the mammoth discount retailer is going to miss its profit forecasts for the year. "It is no secret that many customers are running out of money toward the end of the month."

Look closely at today's inflation news and it is clear why.

While overall inflation is averaging 2.3 percent for the year, which economists agree is moderate, energy prices, which rose 2.9 percent for all of 2006, have been soaring at an annual rate of 21.3 percent through the first seven months of this year. Food costs have been rising at a rate of 5.7 percent this year, compared to an increase of 2.1 percent for all of last year.

What that means is that while the economy is sneezing, lower-income people are experiencing a very bad case of pneumonia. The Bureau of Labor Statistics reported that consumers in July were paying 9.5 percent more for dairy products than they were a year ago; 6.3 percent more for meat, poultry and eggs; and 4.1 percent more for cereal - the kinds of staples that dominate the budget of poor and working class people. They also paid on average 4.2 percent more for rent than they did a year earlier; falling property prices don't seem to be giving renters a break.

A more detailed picture of how hard inflation is hitting lower-income people was presented in a McClatchy Newspapers story on Tuesday: Year-over-year increases of almost 20 percent for eggs, 13 percent for milk, 12 percent for apples and 10 percent for whole chicken.

There are two economies, one for the people who can afford to revel in Bushian optimism —"I'm an optimistic person, particularly when it comes to the ability of Americans to create and dream and work hard," he said at an economic briefing last week—and one for those of us who live paycheck to paycheck, or pretty close to it.

It is to President Bush's advantage to conflate these two economies, as he did at a press conference last week:

"Since we began cutting taxes in 2001, our economy has expanded by more than $1.9 trillion. Since the tax cuts took full effect in 2003, our economy has added more than 8.3 million new jobs, and almost four years of uninterrupted growth. Inflation is low, unemployment is low, real after-tax income has grown by an average of more than $3,400 per person since I took office. The American economy is the envy of the world, and we need to keep it that way."

Such a statement blithely ignores facts (detailed in the Economic Policy Institute's State of Working America report) about the quality of the jobs that the economy has produced and how those jobs compare to the ones lost to outsourcing, and the actual loss of real income by the bottom 90 percent of the economy since 2000 while the top 1 percent enjoys double-digit percentage gains in real income, exacerbating income inequality.

The truth is the economy is still not working for working people, and President Bush and his supporters can't be allowed to ignore that reality.

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