I was watching CNN in the morning yesterday and was struck by a segment on how the flooding in the MidWest was going to affect food prices. The anchor Tony Harris was discussing this topic with Stephanie Elam, a Business Correspondent. Excerpts from the transcript (my emphasis):

HARRIS: Midwest floods not only uprooting lives but devastating the crops we eat. 

Stephanie Elam is “Minding Your Business.” 

You know, Stephanie, I can’t keep reaching much deeper into my pockets here and I know the prices are going to go up for a lot of the produce that we eat here. So give us the toll here. 
…

ELAM: … and more corn is actually shipped away. It’s exported from the United States than actually eaten here. This could also have an effect on the markets that way as well. 

HARRIS: You know what, I need to get in the grocery store a little more often here. You’re talking crops. I’m talking produce. 

ELAM: I know. 

HARRIS: Hello! Get into a grocery store, Mr. Harris. 

…

ELAM: … costs are so volatile right now. Well, if you strip those out, in May, it was up 0.2 percent versus 0.4 percent of an increase in April. So we all know what this is about. I don’t think that’s a surprise to anyone out there because anyone who has been to a grocery store, Mr. Harris, knows that things cost a lot more. 

I’m sure you’ve been to the gas station, though, so you know that. 

COLLINS: He has shoppers beforehand. 

HARRIS: Yes, I have shoppers.

Did you see that? He starts out by talking as if he’s personally feeling the pinch from rising food prices, but does it in such a way (the transcript doesn’t catch this of course) that it’s clear it’s a joke and he knows it – so he’s essentially making fun of people for whom rising food prices are an issue. Then towards the end we get the ultimate negation of that early statement – he doesn’t actually go to the grocery store – he has “shoppers”. How out of touch can this man be? And yet here he and his network are, reporting on the immense toll rising food prices are supposedly taking on the shrinking middle class and being smug about it at the same time. 

How about an assignment for Mr Harris? Send him grocery shopping for himself for a few weeks and see what he reports…

CNN (along with other major news outlets) has been trying to talk the US into a recession now for several years, and while the jury is still out on whether they’ve succeeded yet, they still aren’t letting up. Although this article has some admirable counter-points thrown in, it still relies mainly on anecdotal perceptions rather than the facts to examine the state of the economy.

The article also highlights one of the things which, as a Brit, I find most puzzling about American politics and economics – the definition of the “Middle Class” – which appears sometimes to include everyone except Bill Gates and Warren Buffett and at other times now includes apparently almost no-one because it is being “squeezed”. Where I come from, being Middle Class is about the kind of work you do – sitting in an office rather than working in a factory, for example – not about your level of income or what you can afford to buy with it.

At any rate, quoting from that article:

Only a few years ago, Americans who considered themselves middle class were scrimping to pay for their kids’ college education.

Now, many of them are struggling to cover far more basic needs – gas and groceries.

Take Stacy and Chuck Burris. The Pittsburgh, Pa., couple view themselves as solidly middle class. In recent months, however, they’ve felt anything but.

Burdened by high cost of food and fuel, they are having trouble balancing their budget even though Chuck Burris earns a “comfortable salary” as a software engineer. The parents of five children, three of whom are grown, have essentially stopped eating out and entertaining and are considering canceling the annual family vacation to Maine. They keep to a Spartan shopping list and have planted a larger garden. Instead of buying their 12-year-old daughter summer clothes, they are turning her pants into shorts by cutting off the legs and getting hand-me-downs from family.

Never before in previous recessions have they had to cut back like this.

Without wishing to belittle this or other families’ hardships, I find it hard to understand how current circumstances could be having such a significant impact on their financial status. The article says that:

Food prices, for instance, climbed 5.1% over the past 12 months and April’s 0.9% rise was the largest in 18 years, according to the Consumer Price Index. Gas, meanwhile, hit its highest recorded price of $3.937 on Monday, up nearly 21% from a year ago and 9.7% over the past month, according to AAA.

Well, assume the weekly grocery bill is $200 – not unreasonable, I would think – and the price has gone up by 5% – that would be a sum total of $10 per week extra, or $45 per month. If gas has gone up by 20%, perhaps the gas bill (assuming filling a 15-gallon tank once a week) has gone up by 20%, from $50 to $60, and that’s another $10 per week or $45 per month. Is there really a middle-class family that’s going to be pushed into cancelling its vacation by a $20 increase in spending per week? We’re never told what the household’s income actually is, but assume it’s $60,000 per year gross (which may be conservative since the salary is described as “comfortable”). That increase represents just 1.7% of gross income.

At the same time, the article says, housing prices are falling, but unless you’re actually trying to sell your house that shouldn’t really affect your current financial status. In fact, because the federal funds rate has fallen from 5.25% to around 2% in the last year many people’s mortgage payments should actually be falling during this time, probably by a rather greater amount than those small increases in food and gas payments.

My point here isn’t to argue the specifics of this case – because we’re not given them – but rather to suggest that it seems odd that truly middle class families should be suffering so badly because of the increases in gas and food prices, since these items are typically a small percentage of people’s incomes, especially in the middle class. And that makes this article feel more like further scaremongering from CNN than real reporting. How about emphasizing instead the factual evidence cited elsewhere in the article, and helping to turn around these perceptions, instead of leading with the perceptions and burying the facts halfway down the article and later? And how much are those poll results influenced by the fact that CNN’s been polling people about whether we’re in a recession for the last three years anyway?