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.

Conclusion

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 ….

Notes

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. Update: An analysis by Macroeconomic Advisers LLC ssays that real GDP decreased in April, the second decrease in the past 3 months. Also, GDP decreased at 2.2% annualized during the Feb – April period. Official GDP is published quarterly, so quantitative models provide the best guess at more granular time scales.

    From their website:

    Macroeconomic Advisers LLC is a privately owned corporation that specializes in macroeconomic forecasting and policy analysis. Its founder Lawrence Meyer is now a governor of Board of Governors of the Federal Reserve System. They built, maintain and support the Washington University Macroeconometric model of the United States Economy (WUMM). This system of over 500 equations integrates the key elements of modern macroeconomics with a thorough treatment of monetary and fiscal policy.

    A 2006 study by the Federal Reserve Bank of Atlanta found that over a 19 year period, MA was the most accurate forecaster of the US. Moreover, MA was the only team whose “current year” forecasts beat the consensus over that period, a feat some have argued is virtually impossible. More recently, MA received the National Association for Business Economics Forecast Award for 2006.

  2. Update: An excerpt from a report today by David Rosenberg:

    “The Four Horsemen the NBER {Natinal Bureau of Economic Research} monitors are all contracting and for the most part at a sharper pace than we saw at the outset of the 2001 recessino,which, again, the vast majority of economists completely missed and it is no different this time.

    * Industrial production peaked in January and is down at a 4.2% annual rate since (vs. -3.2% when the 2001 recession started).

    * Aggregate hours worked peaked in December and are down at a 1.6% annual rate (vs. -1.4% when the 2001 recession began).

    * Real sales in manufacturing and retail peaked in October and have collapsed at a 7.2% annual rate (vs. -3% at the onset of the 2001 recession).

    * Real personal income excluding government tranfers peaked in February and are down at a 1.1% annual rate since (vs. +0% at the onset of the last recession).”

  3. I mean what I asked. What part or parts of my question do you not understand? Again, 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?
    .
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    FM reply: Your question was quite clear, and I responded to it with equal clarity. To repeat…

    You are advocating that the media lie to us. I stated the likely results: not only would this quickly become ineffective as these organizations lost all credibility with the American public, we would have lost an important tool for the functioning of our society.

  4. If it was “quite clear”, as you put it, then why did you ask what I meant? Isn’t that a self-contradiction?

    As to your continuing, and rude, misrepresentation of my query, no, I am categorically not advocating that the press — rather than the media in general, in light of how you have excluded broadcast journalism from the purview of the discussion as being beyond your ability to survey — should lie to their consumers/product. Nor has either response on your part been one of “equal clarity” to my question; at the most simple, such would consist of merely a “yes” or “no”.

    So yet again — and please stop attempting to interject the irrelevant strawman of deception by the press — 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: I apologize for the misunderstanding.

    I said “What do you mean? Lie to us, in our own best intersests?” The intent was to (1) indicate my undercertainty regarding your comment, then (2) state how I interpret what you are saying before (3) giving a reply.

    If you are not advocating deception, what do you mean by “do what it can to improve consumer sentiment through positive reporting on the economy?” This is not apparent to me.

  5. I don’t think I’ll be able to explain to you what I mean until I better understand how you process information. I come to this impression due to the still-unresolved contradiction I perceive between my meaning being “quite clear” to you OOH yet you having so much undercertainty as to what it was OTOH that you can still only conceive it to be advocating deception by the press. Since I most certainly was not advocating such deception, yet you concluded that I was, my meaning therefore cannot have been “quite clear” to you.

    Reinforcing this is your earlier response to “another michael”‘s comment “We have standardized measures for recessions….it is not open to how people ‘feel’,” in which you appear to have misunderstood his meaning, interpreting it as being a comment on the effect of consumer sentiment rather than being one about differentiating between defining recessions on the basis of people’s subjective feelings versus doing so via the actual objective real-world facts — i.e., the ‘standardized measures’.

    Additionally, I find it very difficult to imagine what you do not understand about my question; it is almost as though you are constitutionally incapable of conceiving of reporting about the economy that it simultaneously both positive and honest, or at least truthful.

    Your reasoning in these cases is so mysterious to me that I must conclude that I do not think I can competently explain my meaning to you without first better comprehending how you process information. So if you would please explain the continuing contradiction in your responses to me, and how you came to interpret “another michael”‘s comment as you did, I will be much better equipped to explain my meaning to you in a mutually comprehensible fashion.
    .
    .
    Fabius Maximus replies: You expect quite a bit from comments on a blog. I dash these off in my spare time, like most of those commenting here. I note points of undercertainty, make assumptions, and reply (rather than do these in discrete steps, as in a verbal discussion). I try to make these steps explicit to improve clarity of communication, which is always a problem in a site like this — attracting people with so many different viewpoints.

    As for “constitutionally incapable of conceiving of reporting about the economy that it simultaneously both positive and honest, or at least truthful”, that is correct. The business cycle has ups and downs. Over time there are periods of great highs and great lows. I see the reporter’s job as reporting events and conveying the full range of expert opinion. Let the readers form their own opinions.

    “There is a time for everything, and a season for every activity under heaven … a time to weep and a time to laugh, a time to mourn and a time to dance …”

  6. “Everything seemingly is spinning out of control”, ALAN FRAM and EILEEN PUTMAN, AP (22 June 2008) — Opening:

    “Is everything spinning out of control? Midwestern levees are bursting. Polar bears are adrift. Gas prices are skyrocketing. Home values are abysmal. Air fares, college tuition and health care border on unaffordable. Wars without end rage in Iraq, Afghanistan and against terrorism.”

    Comment on AP story: “Media to America: Disaster Seen as Catastrophe Looms“, James Pethokoukis, US News and World Report (23 June 2008).
    .
    .
    Fabius Maximus replies: Thanks for posting this! Columbia Journalism Review used to publish collections of articles like this, in which the reporter appears to have had a psychotic attack, perhaps sliding the article onto the tape while the Editors were at tea. Sometimes despairing (like this), sometimes euphoric (e.g. Obama the Messiah), always getting attention — which suggests the reporters and editors in fact do know what they are doing.

    While the AP article was amusing, Pethokoukis’ reports are not too my taste. Always upbeat (from the small sample I have read), which means blind to a large fraction of the data flow. My cousin once tried painting black half the windows in his car, training himself to drive using only the Force. This did not end well.

    There are so many good sources of economic analysis out there. They are not fun like Pethokoukis, having all those ambiguous trends and uncertain data. Still, they are clear that the US economy is slowing — with almost all metrics at or near levels typically associated with recessions. That tells the past and the present. We can only make educated guesses as to what lies ahead.

  7. After a small investigation, my three posts and the 101 comments on them, I believe we can tentatively tag as an urban legend the basis for the “Dude, where’s my recession” stories: belief that the print media’s economic reporting now has a strongly pessimistic bias. New evidence might change the picture, however.

    The most frequently cited evidence for this theory consists of an event 16 years ago (the 1992 elections), a distant era in terms of America’s news infrastructure.

    The majority of the comments supporting this theory consist of confident assertions without evidence, probably because this meme has been so widely and repeatedly circulated.

    The media reports bad news and good news, which some people find objectionable. Others believe that the media should report news only with a positive bias.

    There are indications that the print media tend to emphasize bad economic news, obeying the adage “if it bleeds, it leads” — but I found no conclusive evidence for this. It might result from selective perception.

    TV News coverage was outside the scope of this discussion. Its audience and dynamics differ greatly from the print media, and we should draw no inferences about TV from this.

  8. A note about the “liberal media” — Many of the posts on this topic assume the mainstream print media is dominated by liberals. Perhaps so at one point, but it seems less certain today.

    From “Your Liberal Media“, Matthew Yglesias (26 June 2008):

    “Today in The Washington Post opinion pages it’s columns from George Will, David Broder, and Robert Novak balanced out by op-eds from Bjorn Lomborg and Richard Perle. “

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