Media Narratives and the Misrepresentation of Economic Conditions

There's a pervasive narrative in the media that suggests the economy is in dire straits, broadcasted almost non-stop. Despite a strong labor market and notable wage growth, this gloomy perspective persists. In reality, the economy has seen an extended period of low unemployment, dropping to below 4 percent over the last 24 months, along with a significant decrease in wage inequality post-pandemic.

The Misconception of Rising Credit Card Debt

A New York Times article recently argued that the economy is 'rigged', highlighting a surge in credit card debt as a key indicator of economic despair. While it's true that credit card debt has been on the rise, the situation isn't as dire as portrayed. The growth in credit card debt virtually came to a halt between 2020 and 2022, largely because pandemic-induced financial aid left many households with more liquid cash, reducing the need to rely on credit cards.

Additionally, there was an unprecedented spike in mortgage refinancing during this period, with over 14 million people securing lower rates, often taking out additional cash in the process. This meant they didn't need to borrow through credit cards. Those who didn't engage in cash-out refinancing still saw significant savings on interest, roughly $2,500 a year on average—a fact that seems to have escaped widespread attention.

The Reality of Debt Service and Income Ratios

With pandemic savings dwindling and refinancing opportunities shrinking, credit card use has resurged. But this uptick merely represents a return to pre-pandemic levels. Contrary to narratives of debilitating financial strain, the ratio of debt service to income, which encompasses all loan obligations and not just credit cards, is near a four-decade low, only dipping lower during the pandemic.

Yet, it's crucial to recognize that economic hardships do exist. Numerous families struggle to afford housing and food—a reality that persisted even during the previous administration, though it wasn't as frequently highlighted by major news outlets then.

The Bigger Picture of a 'Rigged’ Economy

The economy is indeed 'rigged', but not necessarily in the ways certain narratives suggest. Government policies like patent and copyright monopolies contribute to the vast wealth of individuals like Bill Gates and the exorbitant cost of medicines. Additionally, the corporate governance system favors extravagant executive compensations, disrupting wage structures across the board, while the outsized finance sector diverts vast sums from the broader economy to the pockets of the hedge fund and private equity elites.

It's possible to restructure the economy so growth benefits are more evenly distributed, rather than concentrated at the top. However, such discussions are often eschewed by major media entities, which seem more intent on painting the current economic situation under the Biden administration as unfavorable.

economy, media, narrative