No one can figure out how to write a decent presidential speech on inflation.Five months ago, President Joe Biden famously trumpeted the “0% inflation” in July as evidence of progress in the fight against volatile prices. Many people(1)mocked the comment because, while technically true, it masked a more complex picture around the prices of goods and services and seemed like a nakedly political misuse of statistics ahead of the US midterms. Broader inflation at the time was actually much more concerning, and the July report was a quirk and a function of volatile energy prices.
I bring this up for two reasons. First, the US once again has “0% inflation”(2) month-to-month. Second, Biden just delivered another round of remarks on the latest inflation report, and they were just as bad — but for the opposite reason. Clearly humbled by the criticism of the Aug. 10 comments, his communications team handed him a number soup garble of different statistics that no layperson could have possibly understood. That’s a shame, because the numbers were legitimately good this time and not a statistical trick.
In the first 100 words of his speech, Biden gave nine different numbers and a size and scope. That’s obviously overload for the human brain. Is he the president or a Bloomberg columnist?
Good morning. Today we’ve got some good news, good news about the economy. For the sixth month in a row, inflation has come down. Measured over the last 12 months, it has fallen to 6.5%. That’s down from 7.1% the month before. And it’s down from 9.1% this summer. Inflation is now at its lowest level since October of 2021. When we look at just the last 3 months, we see that inflation fell to 1.8% on an annualized basis. It is down from more than 11% in the first 3 months of last year. So the data is clear: even though inflation is high in major economies around the world, it is coming down in America month after month, giving families some real breathing room.
Now, Biden did eventually connect the numbers to real-world themes, but that’s a dizzying way to start a speech. In fairness, inflation data are difficult to parse and prone to a “choose your own adventure” game of interpretation. Should you focus on year-over-year figures or month-to-month? A three-month annualized rate? The consumer price index or PCE deflator? Should you strip out volatile food and energy prices?(3) Remove housing?(4)Should you seasonally adjust?
Now, fortunately, the various flavors of inflation are finally (mostly) in agreement, and the story is legitimately pointing in the right direction. The right approach was to keep it simple. Unfortunately, the White House squandered its communication credibility on inflation over the summer and blew an opportunity to take a straightforward victory lap on Thursday. The inflation story isn’t over, though, so it may yet have better luck next time.
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(1) Republicans and Fox News writers mostly.
(2) Specifically, the month-to-month figure fell 0.1%.
(3) Because they obscure the underlying trend.
(4) Because it enters the index with a lag and can obscure key inflection points.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Jonathan Levin has worked as a Bloomberg journalist in Latin America and the U.S., covering finance, markets and M&A. Most recently, he has served as the company’s Miami bureau chief. He is a CFA charterholder.
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