WSJ: “Inflation is back”

I’d like to point out a new feature in the usually astute WSJ: Printing erroneous information on the front page.

Last month, in a front page, 3rd paragraph snafu, the Journal reported a 2.9% month-to-month change in existing home sales — a seasonal factor that has been consistent over the prior four years. In an inexplicable oversight, they failed to include the year-over-year data: Down a whopping 23.8% vs February 2007. My guess is this data point  inconveniently undercut the article’s main thesis: The recent surge in Foreclosures had driven prices down so low that a wave of buyers came into the market in February 2008, causing the uptick in sales. Unexplained was what caused the same seasonal pattern of improvement from January to February in 2007, 2006, and 2005.

Whether this new, error laden approach is due to some Murdoch directive,
trying to tart up the reporting of otherwise mundane information, or merely sloppy reporting, is as of yet undetermined. However, it was the first major front page foul up I could recall. The second one in as
many months came today. The third one will lead to the cancellation of my print

Which leads us to today’s problem. Instead of waiting until the third paragraph, the article’s first paragraph is tarted up:

"Inflation is back.

After several years of relative stability, a wave of rising prices is washing over the world economy.

It comes at a most inconvenient time. The Federal Reserve is sharply cutting U.S interest rates — the opposite of the usual response to rising inflation — to prevent the housing bust and credit crisis from causing a deep, prolonged recession. That’s making the global response to inflation more complicated.

Consumer prices in the U.S., Europe and other rich countries are projected to rise 2.6% this year, the highest inflation rate since 1995, the International Monetary Fund said Wednesday. In the U.S., consumer prices in February were 4% above year-ago levels. The 15 countries that share the euro currently see inflation of 3.5%, a decade high and well above the European Central Bank’s preferred range. Even Japan, long plagued by flat or falling prices, is seeing modest inflation." (emphasis added)

After those few paragraphs, the rest of the article settles in to the usual WSJ style: accurate, dispassionate reporting. It provides some context for the current wave of food-price driven discontent in many third world countries. But the Page 1 errata is front and center: first paragraph, first  sentence, first word.

WTF ?:  "Several years of relative stability?" Perhaps on Mars, where the market for red dust has remained stable for eons. On this planet, however, prices have been steadily rising quite robustly for the better part of this past decade. This is not a new phenomena: It has been ongoing, regularly denied by the powers that be for years (recall the absurd focus on Core Inflation).   

To review: Over the past 7 years, Oil has risen from about ~$25 to $112; The CRB Commodity index has more than doubled; Gold has quadrupled; Many industrial metals are up 50, to 150%; Foodstuffs have recently doubled; the Goldman Sachs Agricultural Price index has almost tripled over the past three years alone. Oh, and the follar has fallen 40% over the same period.

And just now, inflation is back? Puh-leeze!





Inflation ex-Inflation

Existing Home Sales, Non Seasonally Adjusted, Explained

How Counter-Productive is Realtor Association Spin?


Inflation, Spanning Globe, Is Set to Reach Decade High
WSJ, April 10, 2008; Page A1

Wave of Foreclosures Drives Prices Lower, Lures Buyers
Oversupply Triggers Lenders’ Fast Sales; Mr. English Bids
WSJ March 25, 2008; Page A1

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What's been said:

Discussions found on the web:
  1. dave54 commented on Apr 10

    Typo’s in WSJ today(4/10) CREDIT MARKETS:

    “…Goldman’s Level 3 assets — or illiquid, write-down-prone securities — weren’t increasing as much as at rivals such as o buy back the nonbank, aed commercial-paper holdings…

  2. Venndata commented on Apr 10

    Front page? Have you been reading the Opinion Page for oh, the last few decades?

  3. Jay Weinstein commented on Apr 10

    I started getting the FT for the crossword puzzle a few months ago. They have done SO much better than the US papers in covering this debacle. Clearer writing, with no apparent agenda.

    I recommend it to BR and BP readers.

  4. Opinionated Liberal commented on Apr 10

    Common Ritholtz,

    Where did you get your “whopping 23.8% vs. February 2007” data? You have forgotten to mention that it was in selected areas (not throughout the US).

    Very convenient cherry picking the data Ritholtz!

    P.S. Please cancel your subscription to WSJ, you have been getting your investment ideas from NYT anyway.


    BR: Dear Clueless:

    That datapoint comes from the very first paragraph of the March 24, 2008 NAR release: “Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate (1) of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8 percent below the 6.60 million-unit level in February 2007.”

    I sourced that repeatedly in the prior discussions. I do not know if you were too lazy to look it up, too brain-dead to comprehend it, or purposefully misstated the actual data.

    Regardless, for your offense of willfully misrepresenting readily verifiable material facts, your comments are no longer welcome here.

  5. Marcus Aurelius commented on Apr 10


    Good post, and to the point as usual. The reason the blogs, especially those such as TBP, have become so popular is that they aren’t beholden to corporate/political interests, as are the MSM. Some people won’t understand the irony – or the truth – of the headline you mention, above. They’re very comfortable being lied to and/or misinformed. Your efforts are appreciated.

  6. Mike commented on Apr 10

    Opinionated Liberal: “Very convenient cherry picking the data Ritholtz!”

    Do not pay any attention to Barry’s spinning. He is the spinning maestro.

    Barry only reports the negatives. When the data is positive he attacks it (or the messenger as in this case).

    I have never ever seen him attacking the negative news, even when it is obvious garbage.


    BR: Please give us some examples of where my spin on the data or facts misrepresented reality.

    I try to attack commentary and analysis that is weak, discordant with the raw data. Why don’t you try the same?

    BTW, If you want the job of cheerfully spinning negative news, GYOFB.

  7. Will commented on Apr 10

    The “relative stability” comment is a reference to David Hacket Fischer’s Great Wave.

    “Stability” here is meant more in the social sense than in prices. Rising prices have only recently (to my knowledge) really started to cause a breakdown in the social order.


    BR: Hey Will,

    You may be right — but its a very generous read of that 1st paragraph:

    “Inflation is back. After several years of relative stability, a wave of rising prices is washing over the world economy.”

    In the context of that paragraph, I read the stability as referring back to the inflation (before) and prices (after)

  8. I am not kidding! commented on Apr 10

    One more post as this one will result in your blog on ignore list. You have been crossing the line lately BR.


    BR: Do yourself a favor: Go now.

    Better yet — go get short CRB, Gold, Oil, and get long the SPX.

    Best of luck to ya !

  9. Markus commented on Apr 10

    This is an excerpt of yesterdays release of the Worldbank regarding rising food prices: …increases in global wheat prices reached 181 percent over the 36 months leading up to February 2008, and overall global food prices increased by 83 percent. Food crop prices are expected to remain high in 2008 and 2009 and then begin to decline, but they are likely to remain well above the 2004 levels through 2015 for most food crops.

  10. ECONOMISTA NON GRATA commented on Apr 10


    “Do not pay any attention to Barry’s spinning. He is the spinning maestro.”

    As opposed to….? “The Village Idiots”, I presume.

    Thanks Barry, Great post.

    I have personally viewed the WSJ as sort of a financial rag since the early eighties. I always found it somewhat condescending.

    Best regards,


  11. Jonathryn commented on Apr 10

    It’s a sad state of affairs when we have to go to comedians to learn the truth about the day’s news. It’s not incomprehensible why this is the case–the MSM is bought and paid for by the same interests that have legislative agendas, as well as political and economic orthodoxies that must not be questioned. They can look at the same news as bloggers, but trot out the news according to a Pravda-like script so as not to aggravate the powers that be.

    For financial information, it’s better to rely on Financial Times, the Economist, blogs such as Big Picture, Calculated Risk, and Mish’s Global Analysis. I don’t know who owns them, but the UK’s Daily Telegraph has a refreshing and quite often accurate take on finance in their business section. And for some of the political news, it’s good to check up with the Guardian, as well as Le Monde Diplomatique.

    Sad that we have to rely on the foreign press for our own damn news, but like so many other institutions in this country, the print and broadcast news organs have utterly failed us. There was a time when Voice of America broadcast the news into totalitarian regimes where there was no freedom of the press, and they believed us.

  12. Mr. Obvious commented on Apr 10

    Wow, Barry, looks like you hit a sore spot.

    Also, interesting NYT article on Asian inflation and the fact that they are now passing costs onto US retailers.

    Just one, big, global economy we are.

  13. APB commented on Apr 10

    Barry: I took the “Inflation is back” as in “Inflationary times like those in 1970’s is back”. In effect, I took the article as the sign of times to come in the next five years: Rising interest rates, slowing global economic growth and tough times for equities.

  14. Mongo commented on Apr 10

    Unfortunately, we can expect to see more of the same ‘truthiness’ from Rupert’s newest toy as time goes by.

    The WSJ’ past reputation for publishing some of America’s best financial reporting has been well deserved, but I doubt it will continue. It’s been a feature of Murdoch’s business model: Each new acquisition turns out a product that is ‘dumbed down’, where bling and Fox-style ‘truthiness’ that can be grasped by eight-year-olds are what Rupert believes viewers and readers can be force-fed.

    Or, as Charles Foster Kane said, “[People will think] — What I tell them to think.” Bit of an insult to the intelligence of the public, that.

  15. Michael Donnelly commented on Apr 10

    Same store sales are out and inflation is all over it. Costco is up 7%, take away gasoline and Costco is up 3%. How much of that is food.

    Wal-Mart the same, up 0.7% how much of that is food? Wal-Mart doesn’t say but does say grocery was among the best performing category.

  16. Philippe commented on Apr 10

    Not fair comments on the US media if we were to include the IT media, I would consider and recomend as very informative thorough when needs be.
    Having said that you may rely on outside press to read the informations pertaining to the US, when in Europe I do not see many thorough analysis when it comes to collect data and facts

  17. john commented on Apr 10

    The Journal after having the greatest reporting pages in America, we’ll forget the ed page nonsense, shows distinct signs of loosing that dispassionate objective edge to it’s reporting. To start with about 40% of contents now seems to be politics when it used to be about 15% and then were starting to see reporters opinionating. The most egregious so far seems to be Gerald Seib. I’m watching you WSJ, and I’m a reader of 40 years, and if it continues I’m going to consider a switch to the FT when my subs up in November.

  18. DonKei commented on Apr 10

    At least the WSJ is finally acknowledging there might be a bit of inflation.

    Unfortunately, inflation observers still always seem to think inflation is a demand issue. It’s not. It is ever and always a monetary phenomenon. The article fails to point out that any economic system pegging its currency to the dollar will necessarily suffer the same inflation/currency devaluation as the dollar. The analysis is not up to par so far as good economic analysis goes.

    To be fair to the WSJ, Review and Outlook on the opinion page has been spot on in observing for quite some time that all these commodity price increases have very little to do w/ demand for the commodities and almost everything to do w/ an oversupply of dollars.

    R&O yesterday even praised Paul Volker for his observation that we are already in a dollar crisis–one that started in about 2003, and that only stands to get worse as the fed monetizes/nationalizes the financial industry and the residential mortgage industry.

  19. bluestatedon commented on Apr 10

    Rupert Murdoch’s real goal always has been a business and regulatory environment that gives him completely unfettered space to do whatever the hell he wants to. In order to achieve this, he needs to secure compliant government enablers, messenger boys, and bag men. At the moment, those are to be found much more frequently in the Republican Party. Hence FoxNews with Karl Rove as a fair and balanced “analyst.”

  20. RenoDino commented on Apr 10

    Surprise, surprise. Rupert’s in charge and the WSJ becomes “fair and balanced.” Like we didn’t know that was going to happen.

  21. Francois commented on Apr 10

    “”Several years of relative stability?” Perhaps on Mars, where the market for red dust has remained stable for eons.”


    Thanks for the laugh Barry.

  22. Bart commented on Apr 10

    You most be more important than I realized.

    You are now attracting multiple trolls on very obvious posts.

    Watch your back, you are making some people nervous!

  23. Jmay commented on Apr 10

    “The follar”! I love it — a combination between dollar and faller!

  24. Eric Davis commented on Apr 10

    I’m afraid… BR is a little worked up today.

    talk about spin,
    How about our government turning 40+% inflation over 4 years into 20% “economic growth”… I’ve decided economists can’t do basic math.

    Where are those chickens, I seem to have misplaced. They must be around here somewhere.

  25. NC Jim commented on Apr 10

    I was a subscriber to Forbes magazine years ago when Malcolm was killed (motorcycle I recall) and Steve took over. The magazine changed and took on a decidedly partisan political tone full of what I refer to as “gratuitous spin” not unlike the sex scene in a teenage date movie which does not advance the plot but gets the R rating.

    I made this example up of course but Forbes started writing sentences like :

    “Company X will report increased earnings on Friday if the scumbag Liberals don’t destroy the economy”

    I cancelled very quickly.


  26. me commented on Apr 10

    “Have you been reading the Opinion Page for oh, the last few decades?”

    Uh no, it has been decades since I read that factually-challenged drivel.

  27. Randy commented on Apr 10

    FOX, Ailes (sp?), Murdoch, WSJ…or to quote Deep Throat…”Follow the $.” I cancelled WSJ 6 months ago

  28. Valdan commented on Apr 10

    As I recall recent history, the stable prices occurred during the Clinton administration. I think inflation was reborn on the day Shock and Awe took Iraq by storm.

  29. don commented on Apr 10

    “Recall the absurd focus on Core Inflation”
    Precisely! Glad to see this point mentioned so confidently. It is one of the things that make me nervous about Ben and the current Fed, and it probably unnerves some participants in curency markets, as well.

  30. Espumoso commented on Apr 10

    Anyone who doesn’t believe there is inflation clearly doesn’t purchase what everyday Americans purchase on a weekly basis.

    I do the shopping for my SO’s small cafe and I see inflation every single time I go down the aisles at Costco or the restaurant supply stores.

    For example.

    In March I was able to purchase our bread for $3.99 per unit. In April, it is now $4.49.

    Milk, butter, soda, OJ, greens, eggs, you name it, it has gone up at least that percentage.

    Here’s a nice one. Paper 16oz coffee cups.
    Jan 2008, $60-$65 per 1000
    April 2008, $80-$85 per 1000

    Another. Milk, Costco, 2 gallon pack.
    Oct 2006, $3.99 – $4.49.
    April 2008, $6.29 – $6.49.

    That’s inflation no matter what the (Insert your favored acronym here) governmental metric says.

    And rent is up, gas is up, heating is up, cooling is up, etc, etc, etc.

  31. Alfred commented on Apr 10

    The Bureau of Economic Analysis (BEA) price index for government expenditures, that is analog but different from the BLS’s consumer price index, shows that inflation for state and local expenditures have diverged sharply from other comparable measures in the last three years. In the fourth quarter of 2007, inflation for state/local expenditures was 6.2 percent, or 3.6 percentage points above the analogous measure for the national economy. That disparity was the largest recorded at least since 1990.
    for charts see:

  32. Darkness commented on Apr 10

    This is such a bizarre state of affairs. The cost-push inflation battering up against a defacto decline in the money supply available to consumers.

    As to food prices. How much of this could be solved by next year by the U.S. giving up on ethanol? Last search I could only find 2006 numbers that said 17% of our grain crop went into ethanol production. Which is an awful lot of grain and I suspect 2007 was much higher. I’m going to go research again. Anyone know where there are numbers on this?

    Is ADM and their ilk hording? Anyone looked into that? Rising oil prices seem like par for the course but the grain shortage seems smelly with something more than the resource peaking.

  33. Inflayshawn commented on Apr 10

    Financial Times beats WSJ and I think your recent blog entry helps to prove that.

  34. Pat G. commented on Apr 10

    The government’s inflation numbers which are given to the public are bogus because they do not include food and energy. They decided to drop those two during Clinton’s admin. Inflation has been ever rising and never accurately reported since. The WSJ article is a joke!

  35. Mike G commented on Apr 10

    Guess where Murdoch’s political slant lies on any issue, and you’ll see the WSJ’s ‘mistakes’ lean in that direction every time.

    The editorial page has been a propaganda joke for decades, now the rest of the paper is catching up to it.

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