CNN: Perception Trumps Reality with Recession
Perception is important, but when it comes to economic issues, perception isnâ€™t necessarily reality â€“ unless youâ€™re CNN Senior Business Correspondent Ali Velshi. Then perception supersedes factual definitions.
â€śThis 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€ť Velshi said.
However, Velshi told viewers the economy isnâ€™t in recession by textbook definition.
â€ś[T]his is interesting, because by official standards, we're not in a recession,â€ť he said. â€śRecession is a sustained decline in economic growth. We haven't seen any decline in economic growth. Weâ€™ve seen some decline, but not a sustained decline.â€ť
That doesnâ€™t matter according to Velshi. He has incorporated the left-of-center mantra that suggests â€śhow you feelâ€ť trumps facts â€“ in this case, basic economic fundamentals.
â€śBut, the bottom line is to most Americans, a recession is what it feels like to you,â€ť he said. â€śWhether it comes to your expenses, what youâ€™re earning, how secure are you about your job, the value of your house â€“ things like that.â€ť
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 â€śBlack Mondayâ€ť stock market crash, the media have repeatedly planted the seed suggesting such a crash could happen again.
â€ś[T]he bottom line is I think that economists have realized thatâ€™s not how people see it,â€ť Velshi said. â€śSo, itâ€™s what they call a sustained decline in economic growth. Weâ€™re not there because we donâ€™t have a decline in economic growth. Weâ€™re 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€ť
But, Velshi recognized the role the media play in perpetuating a recession.
â€ś[A]nd talking about it [a recession (can trigger a recession)],â€ť Velshi said. â€śSo, donâ€™t listen to me â€“ go spend whatever you were going to spend regardless of what I just said.â€ť
A more rational view of recession came from former Federal Reserve Chairman Alan Greenspan. Greenspan told CNBC correspondent Maria Bartiromo on the October 15 â€śClosing Bellâ€ť â€śthe odds of a recession are still less than 50/50.â€ť