The myth of media pessimism about the economy

Summary: Do the major media give a negative slant to the economic news, perhaps to help Obama win the election? Maybe they hate America, or slant the news by “if the economy bleeds, it leads.” This post reports on a small test, examining the economic reporting of three major newspapers in search of media bias.

Two recent posts discussed the “Dude, where’s my recession” meme.

  1. Making us dumber, chanting “Dude, where’s my recession?” (3 June 2008) — Economic columnists do a disservice to their readers by ignoring the data showing a weakening economy.
  2. When did “Dude” predict a recession? How severe? (6 June 2008) — Why accurate economic forecasting is difficult, what we know about current conditions, and warnings from a top economist.

Many folks gave comments similar to those of Chester White and Ian:

“The point of that tagline is that the MSM and a lot of lefties are slavering, hoping, pining, praying for there to be a recession RIGHT FREAKIN’ NOW, so that they can try to hang that around McCain’s neck.”

“We may get a recession. We may not. But the media is already there big time. I think that’s the context, responding to media doomsayers that seem all too eager to jump the gun, albeit without any ideological motive of course and without a looming presidential election having anything to do with it. Today when I opened Google I saw three headlines predicting economic disaster. It’s like the media’s Katrina coverage all over again.”

I asked in the comments (and in reply to emails) for examples of articles by these journalist-doomsayers. Or examples of headlines claiming that we were already in a recession, stories predicting certain doom. No replies, no evidence.

Today the Instapundit repeats the “Dude, where’s my recession” with the explanation …

Are we in a recession now, as media folks keep claiming?

Using the magic of Google News I searched for evidence of this, examining (skimming) all stories containing the word recession back to 13 May in the New York Times, Wall Street Journal, and Los Angeles Times.

How many journalists did I find claiming that we were in a recession? Zero. Approx. 1/4 reported economic news with an upbeat quote leading; usually an economist or financial expert saying we were not (or probably not) in a recession — usually counterbalanced with an offsetting quote. Approx. the same fraction lead with a downbeat quote leading. The rest were the typical blur, as in “some economists believe” this or that.

Were the words associated with “recession” slanted? The most common words used were fear of, brink of, brace for, dodging, prevent, worries about, avoid, tipping toward, likelihood of, teetering toward, teetering on edge of, possibility of, skirting a, worries about. All technically correct.

Is it wrong or even irresponsible of the media to so frequently discuss the prospect of a recession? Consider the big picture this year. Almost every economic indicator has slowed, with most at or near levels associated with recessions in the past. And accompanying that we have…

  • The housing bust, one of the most severe since WWII.
  • The credit crunch, one of the most severe since WWII.
  • Oil prices rising — now at $130/barrel, a record high (even in real terms).

Not warning of a possible recession would be irresponsible, even delusional. Economic statistics work for us like the whiskers on a cat. As we move into the unknown future, the we rely on the media to report these, our only hints at what lies ahead. Prudent people act on such signals. Build savings. Be careful when starting new projects or switching jobs. Carefully watch the risk in their households’ balance sheets.

In my (subjective) opinion, the current bias in America tends to excessive optimism. The Instapundit shows this today by reporting strong (but dumb) retail sales but not the more important new unemployment claims data (esp. continuing claims, now the highest since February 2004).   Watch the trend in economic stats; they tell more about the future than does their absolute level.


The assumption of media pessimism, even doomsterism, appears to be an urban legend. It grows with each repetition of “Dude, where’s my recession” intended to counterbalance media bias — with bothering to prove or even illustrate that bias.

More generally, this fits with a larger pattern on the Internet: folks blithely passing on false information with good intentions. Peak oil stories that might be exaggerated, but heighten the public’s awareness. Climate scare stories far beyond actual forecasts (e.g., rising oceans), to motivate necessary public policy action. And slamming the media about bias we know is there, but do not bother to prove.

The Internet can make us smarter, but only if we try harder when creating content — and seeking sites to read that have higher standards. Just a thought for your consideration ….


I did a quick survey — this is a blog, not MIT — to get the geist of recent coverage. Certainly I missed a few slanted stories. Other newspapers may have different slants, optimistic or pessimistic. Also, this ignores TV news; tracking their stories is beyond my resources.

Does the media report bad economic news more prominently than good news? As in “if the economy bleeds, it leads.” This little study did not test this theory (my guess is yes).

This post does not say that the media has no political bias. There are many clear instances of past bias, and many studies indicating long-term political slants (of various kinds). This post examines one narrow subject, in the here and now.

Please share your comments by posting below, relevant and brief please. Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

Other posts about the Internet: does it make us smarter or dumber?

  1. Cable Cut Fever grips the conspiracy-hungry fringes of the web (7 February 2008)
  2. Resolution of the Great Submarine Cable Crisis — and some lessons learned (8 February 2008)
  3. What do blogs do for America? (26 February)
  4. The oddity of reports about the Iraq War (13 March 2008)
  5. Euphoria about the Bakken Formation (10 April 2008)
  6. The Internet makes us dumber: the Bakken euphoria, a case study (15 April 2008)

For more information about geopolitical implications of current economic trends

  1. A brief note on the US Dollar. Is this like August 1914? (8 November 2007) — How the current situation is as unstable financially as was Europe geopolitically in early 1914.
  2. The post-WWII geopolitical regime is dying. Chapter One (21 November 2007) — Why the current geopolitical order is unstable, describing the policy choices that brought us here.
  3. We have been warned. Death of the post-WWII geopolitical regime, Chapter II (28 November 2007) — A long list of the warnings we have ignored, from individual experts and major financial institutions (links included).
  4. Diagnosing the eagle, chapter I — the housing bust (6 December 2007) — What the housing bust shows about America’s fitness to survive.
  5. Death of the post-WWII geopolitical regime, III – death by debt (8 January 2008) – Origins of the long economic expansion from 1982 to 2006; why the down cycle will be so severe.
  6. Geopolitical implications of the current economic downturn (24 January 2008) – How will this recession end? With re-balancing of the global economy, so that the US goods and services are again competitive. No more trade deficit, and we can pay out debts.
  7. A happy ending to the current economic recession (12 February 2008) – The political actions which might end this downturn, and their long-term implications.
  8. What will America look like after this recession? (18 March 208) — More forecasts. The recession might change so many things, from the distribution of wealth within the US to the ranking of global powers.
  9. The most important story in this week’s newspapers (22 May 2008) — How solvent is the US government? They report the facts to us every year.

To see the all posts on this subject, go to the archive for The End of the Post-WWII Geopolitical Regime.

48 thoughts on “The myth of media pessimism about the economy”

  1. I believe you may be missing a bit of the point to the critique that media is pushing the “Recession” meme. It is not so much that they are declaring “We are in a recession” because that statement can be refuted by the simple fact that we have not had a single quarter of negative growth, much less the typically accepted two quartes. Rather, the problem is that all of the talk about a recession, asking people if they “feel” we’re in a recession, etc. This is about building a perception of a recession, not about the recession itself. I know the argument is that this is the same thing that was done in ’92 to help Clinton get elected. To be honest, I don’t buy that arguement. My best guess is that this is a “story” that they can use to build circulation.

    I always find it interesting that when asked, people are likely to say that they economy as a whole is in terrible shape but when asked about their own lives they continue to say that they are doing fine economically. It is a stark dicotomy.

    As for your search of Google New a simple search of “Recession” yield 49K hits, while “Recession and U.S.” yields 29K. I think from these numbers it is safe to say that this story is being pushed… especially considering that continued growth (albeit anemic growth) in the economy.
    Fabius Maximus replies: I do not understand your point. As I said in the post, considering the flow of ominous economic events IMO it would be irresponsible of the media not to warn people of the possibility of a recession. Between slowing economic stats, finanical crisis, and rising oil we have a trifecta of bad news — three of the most common causes of recessions (war and natural disasters being the other two, which so far we have not seen). Do you believe they are not supposed to report the news, or just tell about good news?

  2. Nice try, but I don’t buy. It is easy to observe the way that good news gets buried under a tone of “yeah-buts”, or simply not reported at all, compared to how bad news is selectively trumpeted. The only real recession is the one in which the media’s credibility ratings are receding into negative numbers.
    Fabius Maximus replies: You have some evidence for this, I trust? Or are you just spreading an urban legend?

    This is the third iteration of excuses I have seen for the “Dude, Where’s my recession” theme — the first two having been shown to be probably incorrect.

  3. another michael

    Dumbest story of 2008…Associated press story in May that 3/4 of Americans think we’re in a recession. That story got headlined in more than a few media outlets … and was Olberman’s top story that evening.

    How trivial. We have standardized measures for recessions….it is not open to how people ‘feel’. Yet our lazy (or biased) MSM do stories like this. It adds to the hysteria as well as cheapen the journalism profession.

    Might as well get your information from a Magic 8 Ball than read what passes for mainstream journalism.
    Fabius Maximus replies: “it is not open to how people ‘feel’.”

    Not so. Consumer sentiment is a heavily researched topic because it has been proven to have powerful effects both on the economy and elections.

  4. This reminds me of the H.W. v Clinton campaign season. The media kept the drum beat loud and clear….WE WERE IN A RECESSION. After a time their opinions were catching root. Then came the big one. Bush, having been in office for the past 12 years had been isolated from the everyday part of normal life, going to the grocery store. It is kind of off putting for a standing VP or Pres to go grocery shopping once or twice a week when your secret service detail must isolate the perimeter. Bush, on a campaign stop, went into such a store and was amazed by scanners, something we had become accustomed to in everyday life. Gotcha.

    This is just a recreation of that scenario. Couple this with the insider/speculator price driving of the oil futures market and TADA things are bad. Really, really bad. Vote Obama don’t you see its the only way to save yourself?

    Afterthought, is Soros involved in the oil futures market?
    Fabius Maximus replies: Perhaps you are correct, but can you provide an example more current than 16 years ago?

    As for the actual subject of my posts — reporting of the current slowdown — this increasinly looks to me like an urban legend. Note in my three posts about reporting of the current slowdown, the comments tend to repeat the legend — but never give specific sightings. They just know Bigfoot is out there, they have heard so many people who have seen it, but seem unable to give actual evidence.

    As for high oil prices, there is no need to invoke evil, mysterious and magical speculators. Simple supply and demand data explains the price rise. Futures prices are rising because people in the oil industry read King Abdullah’s announcement. You should, too. Read this brief report:
    The world changed last week, with no headlines to mark the news!

  5. “How trivial. We have standardized measures for recessions….it is not open to how people ‘feel’.”

    It’s worth noting that these standardized measurements themselves depend heavily on economic theory and get recalibrated periodically. Inflation and GDP are essentially constructs of economic theory, not quantities which anyone with the appropriate sort of scale can measure. If 3/4 of people feel like we’re in a recession which economists say isn’t there, this might mean that they’re panicking, I agree, but it might also mean that there’s a problem with the way we’re measuring inflation, GNP, or GDP.

    This is just to say that it is extremely hard to say what’s going on with the economy. And given that the economy is itself an abstraction which is supposed to correlate with facts about how prosperous people are, and given that how prosperous people are has a subjective component, how people feel about our economic performance isn’t completely irrelevant.

  6. Maybe this problem exists because Newspeak is so common. Media talks about there being no recession, Newspeak-hardened audience hears “there’s a recession”.

    This was meant seriously.

  7. If you go to you will find a lot of info regarding the TV portrayal of economic news. One sample of their work: “The Great Media Depression“, Business & Media Institute (2008, no other date given) — “News reports depict economy far worse now than during the 1929 stock market crash.” Excerpt:

    “The economy consumes the nightly newscasts. Broadcast networks report that America’s finances are “like a house of cards.” ABC, CBS and NBC even hyped similarities to the Great Depression more than 40 times in the first four months of 2008….

    “During the week of the 1929 stock market crash, daily news stories reported positive news more often than negative by a 4-to-1 ratio. The week that the Bear Stearns fall occurred, coverage was the complete opposite. Negative stories on ABC, CBS and NBC outnumbered positive 6-to-1.”

    Television I think is especially egregious in their media coverage and overall has far bigger impact than any given newspaper’s coverage.

    I don’t have time to post more examples right now, but they are legion.
    Fabius Maximus replies: Thank you for providing this! I will read it with interest. I did not see any signs of such hype in the NYT, WSJ, or LAT; and explicitly did not look at TV (tracking TV is beyond my resources). I agree that TV is by far the most powerful of the news media, and hence this is a valuable report.

    However, I do not understand what point they are making in the last paragraph of your excerpt. The week Bear Stearns failed, why should coverage have not been 6:1 negative? Objective market indicators, such as spreads in the credit default market, showed levels of panic not seen since WWII. What should the news ratio have been? When the news is negative, their coverage should be negative.

  8. another michael

    Fear sells newspapers. Nothing new about that. One byproduct though is the gap between how people view their own circumstances and how they view the economy as a whole. So while currently 90% of the public describe their economic condition as good, 2/3rds view the US economy as bad.

    Where could they get that national impression from besides a media that constantly beats the Fear Drum.

  9. Pingback: » The economy today

  10. Why would the network news (all liberal/Democrats), and major newspapers (90% liberal/Democrat) want the economic reporting to bias positive? When Democrats are in the White House, yes, but election year with a Republican incumbent president? Of course not!! I don’t need to provide evidence, it is logical, no?

    Similarly, the Iraq war is a quagmire. Bring home the troops now!!! But don’t dare report the bloodbath that will ensue as the last troops evacuate. Think South Vietnam, Laos, Cambodia(Khmer Rouge, Pol Pot). The death of MILLIONS of Vietnamese boat people who had no choice but to flee or die, seems to be a minor detail to the “troops home now” crowd.

    Better to leave Iraq stable, and welcome our troops home as victors for peace, but that would prove the Democrats wrong, because they want to lose Bush’s war. Isn’t politics fun??
    Fabius Maximus replies: Comments like this are, as I have said before, typical of urban legends. Allegations, based on one’s world view (opinions, biases), with little or no evidence. Esp ” I don’t need to provide evidence, it is logical, no?” {Unless you are kidding us; it is difficult to tell from this}

    See Wikipedia for a brief explanation of urban legends.

  11. I concur that the best metric for measuring biased economic reporting is the delta between people assessment of their own lives and their assessment of how other people are doing. People only have immediate information about their own circumstances but they rely on media for their information about other people.

    The bias maybe accidental. The media, especially TV, does a very poor job of conveying the scale of problems. By telling “stories” about specific individuals they imply that such people are broadly representative of the general population under discussion. It is very easy to create the impression that a phenomenon is very broad when in fact it represents only a fraction of the population.

    I recall a psychology study done back in the late 80’s wherein researches had subjects watch a short documentary about people who had relatives who were street people. After watching the documentry people’s gut level estimate for the number of people in such circumstances rose (IIRC) from 2-3% to somewhere like 20%.

    The best test for bias will come after the election. If Obama wins and the tenor changes after he assumes office. The we will know.
    Fabius Maximus replies: I agree, to some extent. There is another aspect to this. If the economy slides into a recession, will all the folks writing “Dude, Where’s my Recession” stories send notes to the major media, an apology for accusing them of bias?

  12. If you think the Iraq war is lost, you are not paying attention. {snip – this is totally off-topic. Every web site has its own community rules. As stated in the post (twice), the comment policy page, and the “About” page, discussions here are focused — not open forums}

  13. I suppose the liberal bias in the Universities, Newspapers, Network News, TV and Film industries, Technology(think Google), government employees, etc. is an “urban legend” as well. The topic is not how the media defines recession, depression, un-employment; it is how the media twists, distorts, information to suit its interests.

    My going off topic was to demonstrate the prejudice, not to stray out of bounds. My question is: Why is it in the interests of the primary media to disseminate information, in an election year cycle, which enhances the image or performance of the incumbent Republican party, president, or congressional representatives? Because……(cricket chirping)
    Fabuis Maximus replies: Your comment was logically related, but operationally bad for such discussions. Others reply to your opinion about Iraq, then we have a venting session about Iraq — with the original subject lost..

    There are 81 posts on this site about the wars in Iraq and Afghanistan, posted during the past five years. Perhaps your comment would be more appropriate on one of them.

  14. What Do Blogs Do For America“, Fabius Maximus (26 Feb 2008) — Excerpt:

    “As these problems reach critical dimensions and our economy sinks into what is (at best) a severe recession, our national leadership will likely move into the hands of someone with astonishingly little capacity to govern.”

    Are you part of the media?
    Fabius Maximus replies: Your point is … what?

    There are 81 posts about this war on this site, written since shortly after the invasion’s end. Roughly about 70,000 words, supported by several hundred links to external content. You can see these by clicking on the reference pages at the top of the right-side menu bar.

  15. The assumption of media pessimism, even doomsterism, appears to be an urban legend.

    Really? You can actually say that with a straight face? You do a “quick survey” and dismiss any argument to the contrary. And you’re right…this is a blog, not MIT.
    Fabius Maximus replies: Please read the post more carefully. My main grounds to suspect the allegations of media bias comes from you — collectively. Let’s recap, by analogy.

    1. I hear stories about Bigfoot, that he is frequently seen.

    2. I read some of the stories, which just assume his existence. No evidence given.

    3. I ask for evidence of Bigfoot’s existence. I get nothing but dozens of “He lives!” “He walks” But no links, no dates, nothing.

    4. I do my own search. A limited one, but which should show signs of Bigfoot if these stories are correct. I find nothing, except a study focused (from a skim) about TV — outside the scope of my post.

    5. I publish my results, and again ask for evidence. I get repeated chaff, as in step #3, plus cheap sarcasim (as in “You can actually say that with a straight face?”).

    My research is not at the level of MIT, but it beats chants of “Bigfoot Lives!”

  16. The fascinating thing is that in your second entry on this story you admitted that the media’s reporting on the economy in 1992 was biased.

    Anyway, your explanation is the “if it bleeds it leads” theory, that it is not ideological bias but a preference in favor of bad news that cuts across ideological lines. That such coverage has the ultimate end result of distorting perceptions exists regardless of the explanation. That it just happens to be occuring during the election season with the Republicans again trying to hold the White House is obviously just a coincidence.
    Fabius Maximus replies: Note the only evidence in the comments to my 3 posts, and the emails, refers to one event of 16 years ago. That was a long time ago, and of little relevance to the specific allegations of media bias in reporting about the economy.

    The media’s focus on bad news is a well-known fact. It does not justify IMO allegations as extreme as in the “Duce, where’s my recession” posts. So far as I can tell — and nobody has yet shown evidence to the contrary — that the media reports both sides of this debate. Optimists and pessimists, good news and bad.

    Not in a perfect fashion, true. For that you must die and go to Heaven.

  17. By the way, I have a zillion stories about oil prices. Has anyone tried to report why the oil prices are rising, or are we all just along for the ride?

  18. FM, hasn’t Paul Krugman of the NYT been predicting economic doom every year since the Bush Tax Cuts? In fact, Bush has been president over an extraordinarily long continuous expansion, after the bubble pop from Clinton (and that great expansion).

    Banks are particularly susceptable to “runs”, when a herd mentality gets all depositers asking for cash today — which no bank can cover. The 6-1 negative coverage at the time of the Bear collapse contributed to the collapse; just as the Fed / JP Morgan bailout calmed the banks that no systemic collapse would be allowed.

    These last 12 months ARE the worst US economy since the Bush Tax Cuts were enacted, so there is more justification for bad news now. But even in 2006, before the housing bubble pop, the coverage was much more looking for reasons at why the good macro numbers didn’t really mean the economy was doing well.

    And I don’t recall any major Dem arguing for policies to stop house price appreciation — the contrary, they argued for more cash to those having trouble buying, and thus contributing to the crash.

    Similarly, the recent big bump in unemployment shouldn’t be a surprise to any who opposed the increase in the minimum wage, and predicted higher joblessness because of it. Whenever that goes up, the incentive to higher new, low-skilled workers goes down. It is the Congress policies, recently Dem but also Rep, more than the President, which influence (not control) the economy.
    Fabius Maximus replies: Paul Krugman is a leftist guy writing op-eds for the NYT. Bill Kristol is a right-wing guy writing for the NYT. So there is some balance there. Neither are journalists, neither write news coverage — which is the subject of this post.

    Perhaps you are right about the unemployment numbers (I doubt it). As I and many others have repeatedly said, for several quarters now almost every economic indicator has been slowing. Most are now at levels associated with recessions or pre-recessionary periods. Economic stats only have meaning in context of the overall picture.

    I do not understand your point about the period around the Bear Stearns problem.

  19. Also, I’m pretty sure the Fed’s willing to pump as much money as needed, despite the lowering dollar, to avoid a negative growth recession. It also relieves many other debtors, like banks holding on to mortgages.

    I expect a recessionary-type reduction in real wages, yet with positive, slow growth. Until oil prices start coming down.

    Look for a new job in an exporting industry.
    Fabius Maximus replies: I am sure the Fed tried just as hard to avoid every other recession since WWI. We had recessions anyway. The Business Cycle Rules!

  20. Here are your own words:

    I agree on all points. Krugman was a brilliant economist before becoming a Spiro Agnew-like attack dog for the Democratic Party. And the bias in the economic coverage of the 1992 election was astonishing — the last hurrah of the pro-Democratic Party monopoly of the media.

    “FM reply: This is correct. Paul Krugman is a leftist guy writing op-eds for the NYT. Bill Kristol is a right-wing guy writing for the NYT. So there is some balance there. Neither are journalists, neither write news coverage — which is the subject of this post.

    “Last hurrah” implies that things have changed since 1992. And so they have…
    ** At the start of 1994 there were 700 websites; today there are hundreds of millions.
    ** FOX News was launched in 1996.
    ** “Talk radio” was in take-off mode in 1992. Rush Limbaugh’s show started in 1988, and had an audience of 5 million by 1990 — which sparked the creation and growth of others. They grew to become a major political force during the Clinton Administration.

    How odd that this this 16 year old Presidential campaign is almost the only evidence folks can cite to support belief that today’s media covers the economy in a negative manner.

  21. Realizing that the recent news search on gnews only allows searches restricted to the last 30 days, the “dude, where’s my recession” tag seems to have been around longer than that. I think most of the darkest economic slants were penned in the period after the October discontinuity and before the release of first quarter GDP. After the growth numbers were public knowledge, some of the more pessimistic rhetoric was clearly dropped. Another quick glance at headlines in the jan-feb period seems to show why the “dude” line resonated with so many people. Again, it wasn’t so much the reporting of negative economic statistics; it was more the freelance interpretation of our impending doom stemming from the folly of conservative mismanagement.
    Fabius Maximus replies: If so, how sad that so many folks continued to parrot the “Dude, where’s my recession” line for so many months — right up to today — after the media coverage shifted as the news shifted.

  22. I follow economic news very closely and I’d have to agree with Fabius in this one. Speaking from personal experience many of the internet hits he found for ‘Recession’ probably read something like “The economic numbers today confirm that we are not currently in a recession.”

    My big gripe with economic news from the mainstream media is that it is very solemn, not well explained, and only deals with extremely short-term issues such as last-month’s employment number or an overall inflation number. These little snippets of economic news can be assimilated into a bigger picture but only with considerable effort. This probably explains why everybody tends to view the economy as being worse than it actually is.

    But that’s not the whole story! If somebody starts looking at long term trends (such as retirement savings starting 15 years ago and projecting 15 years into the future when most boomers will be retirement age) or the federal deficit (particularly paying attention to Social Security, Medicare, and Medicaid), a very different, much bleaker picture emerges and the mainstream media is intentionally ignoring it, probably because nobody is bleeding yet (and when they do start bleeding it will be way to late to fix it) and nobody wants to hear it. That probably explains why people tend to view themselves as being better off than they actually are.
    Fabius Maximus replies: Although I agree, we must be realistic. This is like complaining that fast food is not good for you. We are a free market society, and commercial services exist to provide what people want.

    There are many magazines and websites providing the type of coverage you describe. They have a limited appeal, for obvious reasons.

  23. Why does the cover of my copy of NewsWeek have “RECESSION” in glaring one-inch letters? In fact the front page clearly claims we are in a “new kind of Recession”, although “a new kind” is in a tiny, 12 point font. That seems like a pretty strong counterpoint.
    FM repy: Here are two Newsweek cover articles. I believe actually reading them — not just looking at the pretty pictures — shows little evidence of bias.

    * “The U.S. Economy Faces the Guillotine“, Newsweek (4 Feburary 2008) — “America is on the road to recession, and many predict a worldwide slowdown. But it’s a new economic order, and the emerging markets could take the lead.”

    * “Why It’s Worse Than You Think“, Newsweek (16 June 2008) — “For months, economic Pollyannas have looked beyond the dismal headlines and promised a quick recovery in the second half. They’re dead wrong.”

    I do not understand your point. Do you believe that you, or someone like you, should be Commisar of News — vetting all news coverage so that it conforms to your views? Diversity of opinion is the essence of our system. Perhaps you are looking for something like Pravda in the good old days of the USSR.

    Let’s read Newsweek’s June 16 lead story. You need not go far to see it is balanced in its views — although they clearly state their opinion. What more do you ask for?

    Opening paragraph: “The forgettable first half of 2008 is stumbling to a close.” Followed by a recap of the data.

    The second paragraph starts the story’s interpretation on a positive note:

    “Yet hope springs eternal that the second half will be better than the first. Economists polled by the Federal Reserve Bank of Philadelphia in May believe the economy will grow at an annual rate of 1.7 percent and 1.8 percent in the third and fourth quarters, respectively. Lawrence Yun, chief economist at the National Association of Realtors, tells NEWSWEEK that “home sales and prices in most of the country will improve during the second half of 2008.” (Yun is the Little Orphan Annie of forecasters. He’s always sure the sun will come out tomorrow.) Last month, Treasury Secretary Henry Paulson said, “We expect to see a faster pace of economic growth before the end of the year.”

    The third paragraph gives more positive news:

    “The cause for optimism: the U.S. has called in the economic cavalry, which has responded in textbook fashion. The Federal Reserve has aggressively cut interest rates, bringing the Federal Funds rate down from 5.25 percent last September to 2 percent. Earlier this spring, Congress and President Bush, in a rare moment of bipartisan accord, passed a stimulus package, which will shove nearly $100 billion into the pockets of American consumers by mid-July.”

    Only in the fourth paragraph do they start their analysis:

    “But this downturn is likely to last longer than the eight-month-long recession of 2001. While the U.S. financial system processes popped stock bubbles quickly, it has always taken longer to hack through the overhang of bad debt. …”

  24. FM,

    It strikes me that the media will tend to under-report bad economic news out of self-interest (not for political reasons). The reason is simple: the media make most of their money from selling advertising of some sort. Organizations advertise on the expectation (hope?)that ads will encourage eventual consumption. As a result, the media have strong incentives not to accentuate stories that will lead audiences to defer or avoid consumption.

    Promoting a consumption zeitgeist is critical to the institutional functioning of the media system. If recession reporting works against that institutional imperative, we should not expect to see too much of it (except enough to maintain credibility).


  25. Fabius, I’m in the office right now but I am pretty sure OPEC stated, a while back 1-2 weeks that their thinking was that the price of oil should be in the $60-$70 range. Every time Chavez or Amadinejad bloviate in the media the price goes up. When you read daily summaries regarding oil price rises they are usually attributed to fear of something or another.

    As to the GW-Clinton campaign it will take quite a bit of archive searching to bring out the examples. Hopefully I can find the time to search out proper examples from 1990-1992.

    I just wrote from memory because back in that campaign I was amazed of the negative media coverage of the economy and the Clinton campaign slogan “Its the economy stupid”. It was eerie.
    Fabius Maximus replies: Every other comment refers back to 1992. That was a long time ago. Things have changed since then, as I have described several times in these comments. Nor is a single episode so long ago proof of anything in the current news.

    I do not see the relevance of anything OPEC says to this discussion. Perhaps you might comment on one of my 25 posts about Peak Oil. Esp relevant to your comment is this one: “The world changed last week, with no headlines to mark the news” (25 April 2008)

  26. “Not so. Consumer sentiment is a heavily researched topic because it has been proven to have powerful effects both on the economy and elections.”

    Elections, perhaps, but the economy, not so much. One of the most (unintendedly) ironic aspects of MSM reporting is they trumpet the latest consumer confidence numbers, and state they are “the lowest since [pick a month/year]”. What they never report on is what happened to the economy AFTER the previously-experienced nadir. If you look at these figures in the context of what subsequently happened in the economy, you see a pretty consistent pattern over time that consumer pessimism is highest at precisely those times when the economy is turning in a favorable direction.
    Fabius Maximus replies: It is a bit more complex than that, however. There are many studies of this on the Internet if you would like to learn more about this.

    I consider sentiment one of the less useful numbers, so do not use it. Too much like naval-gazing for my taste.

  27. This is irrefutable. I have been watching this play out for some time.

    First of all, there is no national real estate market. The media helped change perceptions about the real estate market and subsequently the economy. George Orwell was right. And don’t forget to follow the money (George Soros, et al)
    Fabius Maximus replies: I hope you will not be offended if I tell you that your statement that something is “irrefutable” means nothing to me. Facts, please

    As for real estate, aprox 2.8% of all US homes (ignoring rentals and vacations) are standing vacant. This is 50% above the previous peak level (aprox 1.9%, reached during past recessions). Worse, this does not include new homes competed but unsold by builders, which are probably also at peak levels as % all units.

    This is hard data proving massive over-building, which inevitably has depressed prices. Vacant units can only be filled though demographics (new new household forming, net migration, net of homes destroyed/built). These are slow processes, suggesting that these empty units will depress prices for many moons.

    Given these, and many other similarly hard facts, it seems unwarranted to blame the media for the housing bust.

  28. Pingback: Top Posts «

  29. Wait; if

    (1) “IMO it would be irresponsible of the media not to warn people of the possibility of a recession”, and

    (2) “Consumer sentiment is a heavily researched topic because it has been proven to have powerful effects both on the economy and elections”,

    then does not the media therefore also have a responsibility to do what it can to improve consumer sentiment through positive reporting on the economy?
    Fabius Maximus replies: What do you mean? Lie to us, in our own best intersests? If so, that would trade away one of our great advantages — a free press, reporting events as best they can — in exchange for a trivial short-term economic advantage. After all, we would soon realize the press had become a propaganda organ.

    In a similar way, our government has traded away its credibility in exchange for what at the time seemed important advantages — but are now long forgotten, like its credibility.

  30. There a worse things than recessions… stagflation is starting to come to mind.

    Just a larger curiousity for Fabius- who a good economists? (this does not mean they are always accurate, but tend to prove so, more often than not). who is a bad economist?

    Fabius Maximus replies: I do not, as a rule, do “good” and “bad.” What is your criteria? Forecasting ability? Short-, medium-. long- horizons? Theoretical undertstand?

  31. “In my (subjective) opinion, the current bias in America tends to excessive optimism.”

    take a look at the Real Clear Politics (rcp) numbers on direction of the country… 18-25% positive response is not indicative of a country that is excessively optimistic.
    Fabius Maximus replies: That is a difference question. The subject under discussion is short-term economic direction. “Direction of the country” covers both a far wider scope — social, political, as well as economic — and longer duration.

  32. There was an attempt at a controlled experiment to see if the media could affect people’s opinions as opposed to just reflecting society. They had people come in for a political quiz, but made them wait in a waiting room where they had a fake TV news program on. 50% of the people saw one show that did not mention national defense, and 50% saw another that had a story or two about national defense. When they later took the quiz, people had watched the second program were more likely to put priority to national defense in their questionaire. (I heard this in a lecture in PoliSci class at UCSD in 1992 or so I don’t recall the actual study, etc.)

    This is evidence that the media can influence opinion. Since consumer confidence is a factor in the economy, they can therefore help a recession along by keeping up a drumbeat. I don’t think they do this intentionally, I think bad news sells and is more exciting.

    I also have anecdotal evidence that a whole lot of people seem to think we are in economic depression or recession simply based on who is the president (with corresponding thinking that if we could only change who the president was, the economy would do much better.) We’re talking a CPA in Finance from SF around 2006, when we were most definitely NOT in a recession.

    One reason why people tend to the pessimistic view might be evolutionary biology – the people who worry a lot might have an edge over the people who are strolling along smelling the roses.

  33. First of all I stated: “there is no national real estate market”

    Some parts of the country were overdue for a correction, etc. I am willing to wager that I am more of an expert on real estate than you are. The point I make is, the current perception of real estate has been engineered by lies and inaccurate statements from the MSM. What is more frightening are the myriad sources of power and money that influence what we hear in a manner reminiscent of 1984, by George Orwell.
    Fabius Maximus replies: You may be an expert, but (1) your reply totally ignores the data I gave, and (2) your “appear to authority” is little more than a debating trick in this context.

    Supply/demand/inventory balances are the most important factor influencing asset prices. Only in the abscence of obvious imbalance among these factors should one have recourse to intangibles such as “lies and inaccurate statements” (neither of which you describe).

    “There is no national real estate market” is absurdly simplistic. The homes do not move, but every other relevant factor does. Consider a home in Texas or Florida. The potential renter now may be in Mexico or Cuba, deciding if they should move to the US. The potential investor may be in California, benchmarking values in other states vs. his home’s. The builder might be a national chain based in Chicago. Decisions about availability and terms of financing depend on policies of an alphabet soup of public and private institutions: banks, mortgage insureres, government sponsored agencies, national and state regulators, and the Fed.

  34. hmm,

    The Economist, “The world economy The great American slowdown Apr 10th 2008 From The Economist print edition The recession may not be as severe as many fear, but the recovery could take longer—and that is dangerous”

    Slate, “The Good News About the Recession Maybe it will finally teach Americans how to compete globally. By Daniel Gross Posted Wednesday, Jan. 16, 2008, at 11:53 AM ET”

    Boston Globe, “Home / Business Recession is here, economist declares Feldstein heads key forecasting group Slump may be worst since World War II” By Todd Wallack Globe Staff / March 15, 2008

    We think it is pessimistic, because it has been pessimistic. Funny how optimistic the media was during 2000 – as 1000s of technology professionals were laid off, the economy was just great until the election.

    For instance – the pre-election commentary: CBSNews: “A Look At The World’s Economy Some Predict Positive Worldwide Growth WASHINGTON, Dec. 22, 2000”

    Post election: “Growing signs of US economic downturn—job cuts hit auto and technology sectors
    By Larry Roberts 2 December 2000 The assault on jobs in the US is continuing at a record pace as economists openly worry that the slowdown, now widely recognized, could lead to a recession.”
    Fabius Maximus replies: (1) I have no idea what you are attempting to show from these citations. What kind of coverage would you like, if not one that projects forward based on current data?

    (2) Does this represents an unbiased survey of the media cover over the past 8 years, or did you just cherry-pick a few downbeat articles?

    (3) The Larry Roberts story (last cited) appears to have been quite correct.

  35. By coincidence was reading The Wall Street Journal site and they had this quote:

    “A recent CBS News/New York Times poll showed “Americans’ views on the economy and the general state of the country have hit an all-time low,” with 81% saying the nation is on the “wrong track” – the worst-ever number for this barometer. Some 78% told pollsters the U.S. is worse off today than 5 years ago, the highest percentage to say this since the CBS News/New York Times survey began tracking the question in 1986.”

    Anyone want to take bets on how those poll numbers will change if Obama gets elected? I seriously doubt this is supported by the economic numbers. As to the complaints about proof, it seems to me that this is the type of thing that is difficult to quantify except in retrospect. I mean if we wind up in another depression then the media was right all along.
    Fabius Maximus replies: As someone who does track the numbers, I think this view is supported by the numbers. We can only guess what the future holds, but — as you will see from my posts on the long-term economic state of America — I believe some rough weather lies ahead.

  36. Slightly off topic, but highly related to the concept of the topic.

    I always urge people to go to the raw numbers themselves (from all the different sources of course depending on the topic). Some people I talk to say they don’t understand numbers. But when you talk to them more they are far, far better than they realise.

    Example: A friend I was debating with, gave this argument. But I know he is a cricket nut. Now I don’t know about you but I still don’t understand the scoring in cricket. He can rattle off scores and statistics from decades back (“in 1986 xxxx scored 8 fours over silly middle leg over against …” and preceded to rattle off the lifetime scores of the opposing bowler)!

    So now I dont just state (say) economic data to people. I sit them down at my PC and show them the stuff themselves. When they see the numbers for themselves (after cricket, economic stuff is easy ;) ) the, almost, universal opinion is “what a bunch of plonkers the media are, why are they saying this when the numbers are ……”. Sometimes it is the other way of course, “hey these don’t look right, my business is experiencing, my shopping is .. etc”.

    Knowledge = empowerment = less panic = real solutions.
    Fabius Maximus replies: Great, I agree strongly!

  37. On 13 June ABC News nationally aired a story about how an increasing number of teens couldn’t get a job due to the “failing economy”.

    Not due to ‘increased federal minimum wage’. Not due to an economy that is ‘cooled off somewhat from the house-of-fire it’s been for the last few years’. No, ABC described it as a “failing economy”.

    I know, it’s just an anecdote. But mark it down because they all add up.
    Fabsius Maximus replies: No, they add up to nothing. The plural of “anecdote” is not “data.” It is most often just selective perception at work, collecting stray impresions that support your preconceptions.

    Please see the discussion below about teen unemployment changes — a trivial factor in both employment numbers and the overall economy.

  38. As the intelligent, informed, already know, the job market impact for the teens was mainly due to the rise in the minimum wage.
    Fabius Maximus replies: Almost every economic indicator for the US has been slowing for two or more quarters. Most are at or near levels associated with recessions. To cite one factor — and a minor one, at that — as a master explanation for the US economic cycle is not a good practice.

    As for teen employment, see this post by Barry Ritholz at The Big Picture:

    “Philippa Dunne and Doug Henwood of the Liscio Report have crunched the numbers, and they suggest the impact of Teens is de minimis. In an email I received late last night from Philippa, she writes:”

    “Teen unemployment rose 3.3 points, which was probably exaggerated by some calendar issues. But teens are less than 5% of the workforce, so they contributed just 0.2 point of the total rise. Adult unemployment rose from 4.5% to 4.8% – and it was a clean move, with no rounding funniness. The adult participation rate rose 0.1 point, and the EPR [Employment Population Ratio] fell by 0.2 point. Also, the composition of the unemployment rise shows that it wasn’t just the kids: permanent job losers and re-entrants accounted for 0.2 points of the rise, and new entrants just 0.1 point. If you want to spin a story out of this, it could be that people are re-entering the labor force because they’re having a hard time making ends meet.”

    The Liscio Report is IMO the definitive source of analysis about these things.

  39. James Nightshade

    F. Max. writes: “How many journalists did I find claiming that we were in a recession? Zero.”

    I realize ABC News is outside the scope of your ‘quick survey’ (and I’m not complaining), but you may be interested to know that ABC News published an article that says in passing: “The economic recession and fatigue with the Iraq war has tanked President Bush’s approval ratings to 31 percent.” [link]

    Were you to cast your net widely enough, I think you would find numerous other stories of this sort, which do not focus on economics but which claim without evidence that the economy is in recession. Stories which focus on economics will naturally be more careful. I suspect TV news and its offspring to be less careful in this area than the traditional print media.
    Fabius Maximus replies: TV has unique problems with complex stories. Providing balance turns the story into a 2 minute blurr, so they substitute a strong narrative. If the economy is slowing, we are in a recession. All wars threaten to become WWI or WWII. Floods are all so large that they’d awe Noah. It’s a defect of the medium. Folks who rely on TV as their primary information source get the Republic they deserve — and their descendents probably get the opportunity to bow before strong rulers.

  40. Well FM, aren’t you changing the goalposts here?
    1) How many say we are in recession? zero
    2) If the economy is slowing, we are in a recession …

    So you mean?
    ‘Media Pessimism is a myth — if we ignore TV, the largest and most important mythologolizing media.’ << if this is what you claim, it’s a pretty weak claim. Your reply implicitly agrees that TV Media Pessimism, for commercial (consume mass quantities) reasons, is such a normal phenomenon that it can be disregarded.

    Here’s the problem I see. More responsible newspapers hype that “indications are the economy is slowing, about to enter a recession, various analysts (Goldman Sachs, for instance) predict a coming recession”. This conditional, responsible(?) pessimism about the future is translated by TV into a NOW — we ARE in a recession. And a majority of voters believe this defective TV message, and vote in favor of a strong ruler / big gov’t solution.

    And you, rather than fight against false TV media “in recession” NOW pessimism, fight against those who are correctly claiming that we are NOT now in recession, and thus that TV media is too pessimistic, and this extra pessimism tends to make things worse.

    Had Bear Stearns been allowed more time to realize their problems and design better resolutions, they possibly could have sold some of their assets to avoid being bought (had their owners so chosen). The drumbeat of negativity made Bear customers demand a quick resolution, which made them vulnerable to a quick bailout buyout. There was also a lot of coverage about a potential financial system meltdown, with counterparty failures to swaps & derivatives. The fear of counterparty failure made the parties push Bear, and the Fed, for a quick solution.

    With more time, perhaps as little as a 3 month quarter, the managers would likely have been able to sell assets at a 30% discount instead of 50% (or perhaps at 40% instead of 70%? nobody knows the non-panic market prices.) This is where a financial bank run is different than other panics; a bank might have real assets enough to cover its liabilities, but if all investors want their money now, it can’t cover the cash flow.
    Fabius Maximus replies: This is a bit of the “pot calling the kettle black.”

    (1) There was no “moving the goalposts” of the goalposts on my part. I expressly limited my focus to the major print media, which I believe frames coverage of these things among US elites — esp. private and public policy-makers. And I clearly excluded TV coverage, for methodological reasons.

    (2) There does appear to be shifting of the goalposts by the opposite side of this debate.

    (a) The vast majority of the “dude, where’s” articles did not say or suggest that their primary intent was criticism of media bias. They were straightforward economic commentary, an optimistic view in contrast to the data showing a slowing US economy. Media criticism may have been the original intent, but appears to have been lost along the way for many participants.

    (b) The narrowing of the media bias accusation from the “media” to “TV networks” appears to be an attempt to salvage their case, a response to my posts — as I do not see this narrow focus in any “Dude, where’s” articles until now.

    (3) I remain unconvinced that the TV news is biased. The logic appears reasonable, but there is still little actual evidence (only the one study cited above, which I have not yet read).

    (4)That so many folks quote only the 1992 election as proof, the missing link in the “Dude” reasoning might be in the heads its proponents — another way of saying this is an urban legend.

    I remain skeptical, pending evidence.

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