“We do begin with the week on Wall Street, where the Dow took another huge hit, plunging 280 points in just two hours. The cause of the worst credit crunch in almost quarter a century and you’ve seen it in the neighborhoods – a record number of foreclosures,” said anchor Diane Sawyer.
But GMA’s one-sided talk of a “record number of foreclosures” misled viewers. Foreclosures are up compared to 2006, but so are the number of home loans.
According to the Mortgage Bankers Association, a Washington-based organization that represents the real estate finance industry, foreclosures as a percentage are not at a “record number.” The foreclosure inventory rate is at 1.28 percent and is nowhere near the record of 1.51 percent, reached in the first quarter of 2002.*
Mentioning the percentage of foreclosures would have given ABC viewers perspective on the issue. Instead, like other media outlets, GMA blamed stock market struggles on the housing market without bothering to give a more upbeat opposing view.
“The financial fallout from a deteriorating housing and lending market, is spilling, no flooding over into the stock market,” said “financial specialist” and ABC correspondent Bianna Golodryga.
Golodryga’s report also featured the speculation of Alan Murray of The Wall Street Journal. He worried that falling housing prices and lower stock prices could “cause the economy to slow down – less job creation. That will really hurt people in their wallets.”
To find another take on the markets, viewers had to turn to another network entirely. CNBC host and economist Lawrence Kudlow has said that housing and lending troubles are just a small part of the big picture. Other economic indicators show nothing of an economic downturn as he pointed out on his blog on National Review Online.
“So, while the mainstream media peddles its flimsy ‘sky is falling’ narrative, the reality is a 13,400 or so Dow, along with rising wages and a 4.6 unemployment rate, point to a prosperous nation These are the key barometers. The Bush boom continues.”
*Clarification: There is more than one way to measure foreclosures. The above-mentioned figure is the foreclosure inventory, which is the number of houses in foreclosure. Another way is new foreclosures, which have reached a record high this year. Bloomberg reported: "The share of all mortgages entering foreclosure rose to 0.58 percent in the first quarter, the Mortgage Bankers Association said in a June 14 report."