Economic knowledge in the news business

There is a blog I have read for a while called Beat the Press that attempts to dispell myths about economics in the media. As I have noted previously, a good many of the posts start there with a liberal point of view. His defense of Social Security was stunningly mind-numbing. But I found one that should be added. In a semi-serious column for the LA Times, Patt Morrison, wrote today that some major American icons would be out of luck with current gas prices. Mentioned were Bonnie and Clyde who terrorized a couple of states for a couple of years before being ambushed near the Texas-Louisana border in May of 1934. So I went back to indicators to look at what gas cost when Bonnie and Clyde were gunned down. Gas was 19¢. The CPI has gone up by 1422.56% - thus gas would seem to be higher than the CPI growth rate in current terms. But that may not tell the story.

In 1934 a loaf of bread was 8¢, milk was 45¢ a gallon, a new car was $575, a house $5972, and the average income was $1506. That would put gas (had it risen at the increase in the CPI) at $2.70 (remember in California a good percentage of the price of gas is taxes - nationally about a quarter of the price you pay at the pump is federal and state taxes),bread would be $1.14, a new car would be $8179, a house would be just under $85,000 and median income would be under $21,500. Obviously, a lot of things are different between the two times. There are a wider array of consumer goods, the average workweek is shorter, the average house and car have more bells and whistles and probably size and durability.

I am not trying to rain on Morrison's funny story only to point out that comparisons are not always easy. In this case the seeming high price of gas may not be as bad as it seems.