Non-Linguistic Inflation Framing in the Wall Street Journal

Not for the first time, I was struck by the financial media’s take on today’s CPI release. Here was how the Wall Street Journal framed it right before the data came out.

It’s not that inflation might pick up again, it’s that the “downturn” in inflation might “stabilize”. It’s not that inflation remains way above the Fed’s target, it’s that “the rate of price gains” may continue to fall.

In truth, headline CPI bottomed in June and hasn’t budged a bit (except to eke higher) over the past six months. I don’t know why this is so hard to understand.

But hey, hey, hey! Why are we talking about headline CPI anyway? We all know that core CPI is FAR more important and is what we should all be paying attention to! Hence this graphic in the WSJ recap article of the CPI report this morning, with the core rate in bright red and the headline or overall rate in a faint dotted line beneath:

I mean, yes, headline inflation is maybe a little stickier than we would have liked, and core inflation is higher than expectations, but look at that bold red core inflation line! It’s clearly coming down and there should be nothing here to get in the way of the Fed doing <<checks notes>> SEVEN rate cuts this year.

Seeing this today piqued my curiosity regarding the way that the Wall Street Journal represents inflation data in charts and figures. As you know, we do a lot of work here to understand how the media frames issues linguistically, but we haven’t done much to see how that carries over in graphical narrative representations. Would the same patterns we see in the WSJ’s words be represented in the WSJ’s pictures?

Oh yes.

Here’s the same central graphic from the same meat-and-potatoes review article on the July 2023 release of CPI data. This is when all financial media, including the WSJ, was really beating the drums that it was time for the Fed to stop hiking, despite a peskily high core inflation rate.

LOL, you can’t even see the core CPI line in beige behind the bright red headline CPI line!

So I went back through the WSJ coverage of every CPI data release for the past 18 months, to see how their graphical emphasis of core and headline inflation had changed, and whether those changes tracked their linguistic narratives.

Would it surprise you to learn that in the summer of 2022, when the Wall Street Journal was linguistically taking an extremely hawkish line, saying that inflation was out of control and the Fed needed to hike immediately, they did not represent core CPI at all in their CPI data release graphics?

Core CPI – what we are told today is awkshually the only dimension of inflation that really matters to the Fed and to investors and, frankly, to anyone with half a brain – was nowhere to be seen in the WSJ’s bread-and-butter graphical representations of CPI reports so long as the WSJ wanted to emphasize the ‘runaway’ nature of inflation and the ‘policy error’ of the Fed and White House in not combating inflation more forcefully. So weird.

Weirder still, as soon as the WSJ backed off its hawkish positions and began to shout whoa, whoa, whoa! that’s quite enough in rate hikes, thank you very much! in early 2023, the most amazing thing happens. Core CPI becomes the most prominent feature of the standard CPI release review article graphic.

It’s kinda funny. They experimented with this purple color line for a couple of months, tried dark black one month, then finally hit on good old-fashioned bright red. Today is the first time they’ve dropped the gray line for headline inflation in favor of an even fainter dotted line for headline inflation.

Anyway.

What does this mean for inflation in the real world, either where it’s been or where it’s going? Absolutely nothing. I personally think that inflation bumps along here for a few months and then reaccelerates with a vengeance in the spring, but my opinion and $2.90 will get you a NYC subway token.

The significance here is not in the real world but in Fiat World, where reality is given to us by declaration rather than experience. The significance is in the effort that Big Media, Big Tech and Big Politics make to shape the way we think. It’s not a lie, per se, but it’s not a truth, either. It’s all just story, all the way down, not just in their words but in their pictures, too.

Today both Wall Street and the White House are determined to tell you a story that inflation is over, mission accomplished. Wall Street because they want a cheaper price of money and the White House because they want to win an election. Are they right? Is inflation over? Like I say, I honestly don’t know. What I DO know is that they’re telling this story regardless of being right or wrong. What I DO know is that if we care about being right or wrong we must look through the story-telling.

And that’s what we do at Epsilon Theory. We try to look through the story-telling.