Lefties Get a Harsh Economic Lesson in Confirmation Bias

The debate over whether the economy is good or bad has been one of the defining public fights of this era. After the economy completely bottomed out in 2020 and America experienced Great Depression-levels of unemployment, it bounced back stronger than any of its Western peers. But does that mean it’s good? What does a “good” economy even mean in a world defined by the worst inequality in a century?

Simply pointing to GDP or other traditional macro measures like it does not tell the whole story. If there is anything we have learned in our new Gilded Age, it’s that American prosperity is reserved for the ultra-elite. I wrote last year how there are real economic weaknesses making people’s lives more difficult, namely that prices are still very elevated from 2019. You are not going crazy, basically everything is more expensive than it was before 2020, and the people saying that economic struggle is a figment of your imagination are some of the most out of touch folks in America.

But that doesn’t mean we need to do full Fox News-style trutherism on the economic statistics, which brings me to a dogshit piece in Politico by former U.S. Comptroller of the Currency, Eugene Ludwig, that has animated a lot of my fellow lefties who are sharing it wide and far. The article is titled “voters were right about the economy. The data was wrong,” and if it had just stopped at the first period, it would have had a point. Where it runs off the rails is everything after that sentence when Ludwig just redefines what words mean.

If you filter the statistic to include as unemployed people who can’t find anything but part-time work or who make a poverty wage (roughly $25,000), the percentage is actually 23.7 percent. In other words, nearly one of every four workers is functionally unemployed in America today — hardly something to celebrate.

Pretty shocking finding, right? A quarter of America is functionally unemployed??? That’s staggering, but only if you don’t know what the word unemployed means. Plus, according the to U.S. Bureau of Labor Statistics (BLS), the rate of people working part time is near all-time lows. The precariousness and unfairness of making $25,000 per year aside, if you are working you are not unemployed. The 23.7 percent figure is wholly made up. Actual fake news. If we can’t agree on what words mean, then we are well and truly fucked. Not to mention, as The American Prospect’s Ryan Cooper noted, simply just taking all people who make $25,000 per year and putting them in the same bucket is beyond dishonest framing that no self-respecting economist would ever do.

and the poverty thing is dishonest because the definition of poverty depends on household size. a single person making $25k has a *very* different life than a single mother with 2 kids. bad in 2 ways: you falsely include many 1-2 person households AND falsely exclude some large households

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— ryan cooper (@ryanlcooper.com) February 12, 2025 at 7:11 AM

This Politico article by Ludwig is trafficking the exact same kind of “logic” that conservatives used during the Obama years. They would include retirees, students, stay at home parents and people institutionalized in mental health and penal facilities in the unemployment stats to say that the unemployment rate was far higher than it really was—with Trump even asserting in 2016 that it was 42 percent. Anyone accepting Ludwig’s assertions now should also believe Trump’s claim from 2016 because they use similar methods to reach similar conclusions.

Ludwig also dishonestly frames another well-known economic dynamic as if he is the only one who sees through it for what it really means. He writes that “Those with modest incomes purchase only a fraction of the 80,000 goods the CPI tracks, spending a much greater share of their earnings on basics like groceries, health care and rent…the CPI underestimates the impact of inflation on the bulk of Americans.”

Firstly, I genuinely don’t know what he means by the first part of that sentence because shelter is by far the largest proportion of the Consumer Price Index (CPI) and food and health care are the second and fifth largest parts of CPI. The dynamic of inflation hitting people with lower incomes harder than those with higher incomes is well-known, which is why the BLS tracks a lot of different kinds of CPI and has even written up entire studies providing reams of evidence about this dynamic that Ludwig fails to. I literally learned this basic inflationary dynamic in econ 101. We also know that the rent captured by CPI lags due to how it is calculated, as the BLS has detailed. Plus, the overall CPI figure that Ludwig places so much focus on really is only paid attention to by the media, and it is not the same core CPI figure that policymakers center their focus on. All of this is not some secret that BLS does not take into account, there are terabytes of specialized data dedicated specifically to the dynamic that Ludwig thinks he is uncovering as some hidden truth.

Real disposable personal income is rising and has been steadily rising, but I think the tale of why so many feel real tangible economic pain can be found in the upheaval around 2020 on the chart below. It’s strange to think about it like this, but it makes sense given that the early stages of the pandemic saw the construction of the most robust social safety net the United States has ever created and gave folks more disposable income than they ever have. Disposable income is on its steady march upwards over time, but it is down quite a bit from the pandemic highs. The difference between real disposable income now relative to March 2021 is the same difference as real disposable income now relative to September 2016.

A much better economist like Gabriel Zucman has already detailed one of the central issues here, which is that the greedflation The Wall Street Journal acknowledges that COVID brought, combined with the expiration of all these government programs, left people feeling much more precarious about their economic situation. Things are more expensive now and the rent is too damn high and it is more difficult to make ends meet than it was before the pandemic.

Low wages are growing, but the decline in disposable income over 2021-23 due to the phase-out of Covid policies completely swamps that — not crazy to believe this is behind a lot of people’s discontent with the economy pic.twitter.com/TKjPL2YQMT

— Gabriel Zucman (@gabriel_zucman) December 4, 2023

It’s understandable to doubt the people saying the economy is good because there is plenty of data to question that notion, but the disconnect between reality and perception is staggering. A poll last year found that nearly half of Americans believe that unemployment is at a 50-year high (it’s at a 50-year low), and 55 percent believed the economy was shrinking (GDP has grown every quarter since 2020). People are right to doubt the elite narrative that things are good, but that does not mean you can just invent a new reality out of whole cloth like Ludwig did here.

Stop sharing this horrible Politico article that uses the same kind of economic trutherism that the GOP has for years. You are making yourself look like a fool every time you do. Lefties have a point that the economy is not as rosy as traditional metrics would lead you to believe, we did just experience the worst housing market in 30 years after all, but you shouldn’t just accept every critique that fits your preconceived notions. Whether the economy is good or bad is not a question with a straightforward answer, and you should be cautious to trust anyone taking the Fox News angle of just making shit up to fit their bias.