CNN: Perception Trumps Reality with Recession
Perception is important, but when it comes to economic issues, perception isnât necessarily reality â unless youâre CNN Senior Business Correspondent Ali Velshi. Then perception supersedes factual definitions.
âThis is the latest CNN-Opinion Research poll, between October 12th and 14th. Get this: 46 percent of Americans think the economy is in a recession â 46 percent. Nearly half of all Americans think that we're in a recession,â Velshi said.
However, Velshi told viewers the economy isnât in recession by textbook definition.
â[T]his is interesting, because by official standards, we're not in a recession,â he said. âRecession is a sustained decline in economic growth. We haven't seen any decline in economic growth. Weâve seen some decline, but not a sustained decline.â
That doesnât matter according to Velshi. He has incorporated the left-of-center mantra that suggests âhow you feelâ trumps facts â in this case, basic economic fundamentals.
âBut, the bottom line is to most Americans, a recession is what it feels like to you,â he said. âWhether it comes to your expenses, what youâre earning, how secure are you about your job, the value of your house â things like that.â
The media may have played a role in creating this notion the economy is in a recession. Coming up on the 20th anniversary of the 1987 âBlack Mondayâ stock market crash, the media have repeatedly planted the seed suggesting such a crash could happen again.
â[T]he bottom line is I think that economists have realized thatâs not how people see it,â Velshi said. âSo, itâs what they call a sustained decline in economic growth. Weâre not there because we donât have a decline in economic growth. Weâre still on the plus-side of economic growth. But, these things can accelerate very quickly and one thing that can trigger them â in the past â is high oil prices.â
But, Velshi recognized the role the media play in perpetuating a recession.
â[A]nd talking about it [a recession (can trigger a recession)],â Velshi said. âSo, donât listen to me â go spend whatever you were going to spend regardless of what I just said.â
A more rational view of recession came from former Federal Reserve Chairman Alan Greenspan. Greenspan told CNBC correspondent Maria Bartiromo on the October 15 âClosing Bellâ âthe odds of a recession are still less than 50/50.â