In the richest country in the history of the world, this Obama economy has crushed the middle class. Family income has fallen by $4,000, but health insurance premiums are higher, food prices are higher, utility bills are higher, and gasoline prices have doubled. Today more Americans wake up in poverty than ever before. Nearly one out of six Americans is living in poverty.
Romney is absolutely right that the economic situation remains dismal, and the gist of what he said is right. Some of the numbers are off -- according to the Census Bureau, median family income in 2010 was down $1,900 from 2008 adjusting for inflation, not $4,000 -- but average family health insurance premiums in 2011 were up $2,393 from 2008, food prices last month were up 6.5 percent from January 2011, utility prices were up 1.7 percent and motor fuel prices were up 78.6 percent. In raw numbers, 46.18 million Americans were in poverty in 2010, above the previous peak of 39.85 million in 1960.
In 2010, 46.18 million was 15.1 percent of the U.S. population. That's a big portion. But it's a whole lot lower than 22.2 percent, the percentage in poverty in 1960. Indeed, if you look at the poverty rate from 1959 -- when the Census Bureau started computing it -- onward, it's clear that poverty under Obama has not come close to where it was before the War on Poverty, a peak, indeed, that hasn't been neared since Lyndon Johnson launched the Great Society:
And it's not just the poverty numbers. The inflation data is similarly presented without important context. Yes, food, utility, and gas prices are up. But unless the economy is in a deflationary spiral, prices are supposed to go up. The Federal Reserve has implicitly set a target of 2 percent inflation every year -- that is, as a matter of policy it is committed to making prices grow that much. And inflation, in these three categories and generally, has been fallen sharply. Let's look at overall, food, and utility inflation first:
The red line is overall inflation, the blue line utility inflation, and the green line food inflation. The black vertical line is when Obama took office, and the dotted line is the Fed's 2 percent target path for inflation As you can see, inflation in all three categories has been under target for most of Obama's presidency, and was above target for the eight years preceding that. Utility prices, in particular, took a huge plunge with the economic downturn. Food prices are the only ones that are above target at the moment, while overall inflation has once again dipped below 2 percent. Have prices risen under Obama? Absolutely. But they rise all the time.
Gasoline is a different story:
Gas prices have nearly doubled since Obama took office, but that's because they took an enormous dive due to the economic crisis. As my colleague Glenn Kessler notes, gas prices are roughly where they were exactly four years ago, and the overall price spikes aren't too different in scale from those during Bush's presidency. This is not to indict either president but just to note that gas prices are overwhelmingly driven by factors — such as increasing demand from Chinese and Indian drivers, declining supply from oil producers, etc. — outside of the control of U.S. policymakers.
So Romney didn't lie last night. Every one of his claims was true as he phrased it. But a viewer could be forgiven for thinking that poverty and inflation have been at unprecedented highs under Obama. They haven't. The War on Poverty's programs permanently lowered poverty in the United States, and while poverty has spiked during the recession, it hasn't gotten nearly that high. And inflation has actually been well below where the Fed wants it.