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Data Disconnect: The price for a dozen eggs is displayed on the edge of a shelf in a refrigerated case in a Whole Foods store Tuesday, July 15, 2025, in south Denver. Credit: Associated Press

As one of President Joe Biden’s top economic advisers, I frequently made my way out to the White House North Lawn to give interviews to the media about the state of the U.S. economy. Especially as the pandemic-induced recession faded in the rearview mirror, I was out there hundreds of times touting how the unemployment rate was at 50-year lows on the back of remarkably strong job growth. Inflation was falling and inflation-adjusted pay was rising.

And yet in every single interview, I got the same question: So why aren’t people feeling it? Why so much good data amid so many bad vibes?

In fact, the question was not hard to answer. It comes down to one word, a word that defines the dominant economic challenge with which American families have been struggling for years: affordability. Whether it’s housing, child care, health care, groceries, utilities, insurance, or other costs, significant numbers of Americans have found that these and other critical goods and services are either out of reach or so pricey that, after they’ve paid for them, they don’t have enough money left to even think about getting ahead.

The Mismeasurement of America: How Outdated Government Statistics Mask the Economic Struggle of Everyday Americans by Gene Ludwig Disruption Books, 200 pp.

This duality between the data and how people experience the economy is the subject of The Mismeasurement of America, by Gene Ludwig, a former comptroller of the currency during the Clinton administration*.* Focusing on unemployment, wages, inflation, and the growing economic distance between Americans at the top and the bottom of the income scale, Ludwig argues that the problem is that the numbers I was touting were, if not quite wrong, then “profoundly misleading.” He then develops his own set of numbers, which he argues better explain why people have long felt a lot worse about the economy than you’d glean from the government’s top-line statistics. While Ludwig is right that top-line numbers, all of which are broad averages, fail to present a full picture of how the different income classes are faring, that’s not a “mismeasurement” problem. It instead reflects the impossibility of encompassing in just a few numbers something as complex and disparate as the U.S. economy. A better title for his book might have been “The Incomplete Measurement of America.”

Ludwig’s critique of inflation statistics is particularly germane to the affordability crisis. The Consumer Price Index is an overall metric that averages out the changes in prices faced by 90 percent of the population. (The CPI does not include prices in extremely rural areas, farm households, and religious communities, among other exceptions.) Ludwig reasonably worries, however, that the average obscures important differences in inflation between income groups.

The Bureau of Labor Statistics, which publishes the CPI, has itself been looking into this and they find that from 2005 to 2024, prices rose 66 percent for those in the bottom fifth of the income scale but just 57 percent for those at the top. This disparity is a double disadvantage: Such households face both lower incomes and higher prices. Ludwig’s adjusted CPI, which he calls the “True Living Cost,” or TLC, captures this dynamic by significantly up-weighting in the index the goods and services that dominate the consumption basket of less-well-off households, including housing, health care, food, and child care.

Ludwig’s book provides an important bridge between good data and bad vibes. In an economy where inequality has been on the rise for decades, where millions are underemployed, where poor people’s inflation rises faster than that of the rich, averages increasingly fail to tell the full economic story.

While this is the right way to drill down on the affordability challenges facing low- and middle-income families today, Ludwig misses one of the more important positive price developments of our time. For technology goods, like computers and smartphones, the TLC registers large price increases while the CPI registers the opposite. The CPI has it right, reflecting a rare cost decline that’s actively making us better off. The BLS statisticians adjust for the fact that computers and cell phones are remarkably more powerful than they used to be. Decades ago, it would have cost millions of dollars for a computer to do what a $700 laptop can do today. Adjusted for quality, the cost of such technology has fallen sharply over the years, and this decline has improved consumer welfare. Yet the TLC appears to ignore these quality improvements and somehow has technology costs soaring over time.

For another example of how Ludwig offers an overreaching solution to a real measurement challenge, consider unemployment. Ludwig argues that instead of the 4.3 percent unemployment rate for August reported by the BLS, what he calls the TRU—the “True Rate of Unemployment”—is 24.7 percent. Anyone with even a passing familiarity with the history of unemployment in America will realize that Ludwig has either made a mistake or is aggressively redefining unemployment. The last time unemployment was that high was during the Great Depression.

Ludwig’s “unemployment” rate, however, includes a lot of people who are, in fact, working, both part-timers and low earners. His terminology is thus off, as is his critique of the current measurement system, which is clearly, transparently, and consistently measuring what it says it’s measuring. If you looked for a job and you didn’t find one, you’re unemployed. That simple and intuitive definition has revealed important information about labor market conditions for many decades.

But as Ludwig’s adjustments reveal, there were a lot more underemployed and underpaid people in the American labor force in August than 4.3 percent. That doesn’t make the official unemployment rate wrong or misleading. Though Donald Trump, who recently fired the commissioner of the BLS, might claim otherwise, our statistical agencies continue to rigorously churn out valid, reliable numbers. (Trump doesn’t like that they show the tariffs raising prices and cracks forming in the job market, but that’s actually a testament to their accuracy.) But Ludwig’s metric helps to bridge the gap between what the official jobless numbers say and the struggle that many working Americans go through every day.

Extracting from these weedy details, and recognizing that the current system is not mismeasuring America, Ludwig’s book provides an important bridge between good data and bad vibes. As he shows, in an economy where inequality has been on the rise for decades, where millions are underemployed, where poor people’s inflation rises faster than that of the rich, averages increasingly fail to tell the full economic story.

Of course, many authors, most notably Thomas Piketty in Capital in the Twenty-First Century, have made this point before. But by looking at the problem through the lens of jobs, hours worked, wages paid, the costs of housing (and utilities, such as electricity), child care, health care, and so on, Ludwig’s measurements help to shine a light on a policy agenda to address the affordability crisis. His underemployment rate would come down, for example, if we helped involuntary part-timers move to full-time schedules. (Ludwig would correctly note that such a change would not show up in a lower unemployment rate.) An affordability agenda, which Neale Mahoney and I describe in a new brief from the Stanford Institute for Economic Policy Research, would help make it easier for economically stretched families to afford housing (by making it easier and cheaper to build), child care (through targeted subsidies), and health care (reversing coverage cuts, Medicare buy-in) in ways that would directly feed into Ludwig’s alternate cost-of-living measure.

What we should take from this book, then, is not that America is mismeasured. It’s that the gap between what the top-line numbers report and how folks feel about their economic situation is, in part, a function of the increase in economic inequality, of how far they’ve fallen relative to the average. Should we want to better understand how America is really doing, we must dig deeper into the numbers.

Jared Bernstein is the former chairman of the United States Council of Economic Advisers under President Joe Biden. He writes the Substack newsletter The Contrarian. More by Jared Bernstein