If, on September 27, you subscribed to The Morning of the New York Times, you may have read:

An independent analysis has found that President Biden’s student debt relief plan could cost around $400 billion, or around 2% of the country’s annual economic output.

What you wouldn’t know is that the “independent analysis” was done by the Congressional Budget Office, a very reliable agency and not one of the many independent crackpot nests of “analysts”.

Also, you wouldn’t know that that $400 billion was calculated to be spread over 30 years. However, you would be led to believe that these “costs” would be incurred in a single year and would amount to 2% of the country’s current total economic output (GDP).

To be picky, $400 billion would be 1.6% of the latest GDP figures, but a news report is free to round up to 2%. Yet, is comparing a 30-year estimate with a single year’s number appropriate, even for the NYT?

If you were looking for a more reliable presentation of the facts and weren’t one to favor the news, you would have found it in the Indianapolis Star and elsewhere on the same date. It was an Associated Press account (probably via Gannett).

Both accounts focus on the decrease in federal government revenue due to the debt cancellation program. What is not mentioned is the first year pardonee benefit of $21 billion.

What will these borrowers do with the money for principal and interest payments that they don’t have to send to the federal government?

The White House talks about the clothes and other necessities they can buy. The Out House assumes that these funds will be spent on beer, chips and sports betting. In both cases, GDP increases.

Now let’s look at the latest GDP figures.

The Bureau of Economic Analysis (BEA) announced that GDP fell by 0.6% in the second quarter of the year. This figure was unchanged from the previous estimate for the second quarter.

For each quarter of the year, the BEA produces an estimate of GDP. These are called the lead, second and third guesses. Monthly revisions are necessitated by Congress and others who want the best numbers available as soon as possible.

Revisions are made possible by additional data as it is submitted to the BEA by the companies and other government agencies.

But the public, unaware of these necessary procedures, assumes that each publication is fresh news. Hence the misconception about America in another recession. In fact, the 0.6% drop in the second quarter was better than the -1.6% in the first quarter.

Both numbers are too small to get excited about. We’re not in a recession, but public anxiety over headlines and short stories could make it happen.

Morton Marcus is an economist. Join it at [email protected] Follow his and John Guy’s take on “Who Gets What?” wherever podcasts are available or at mortonjohn.libsyn.com. Send feedback to [email protected]