Consumer Confidence: Only News When It's Low(er)
Is consumer confidence at an “all-time low”? The media say yes, but the facts say no.
“The market is tumbling, while oil prices are soaring; consumer confidence at an all-time low,” reported Savannah Guthrie on the NBC “Nightly News” Jan. 12, 2008, adding, “unemployment at a two-year high; retailers reporting the weakest holiday sales in five years; housing values are plummeting.”
But the lowest Consumer Confidence Index of all time, according to the Conference Board, which tracks and reports confidence data, came in December 1974, when the index was at 43.2.
January’s number, the most recent available, was 87.9. The last index released before Guthrie's report was 90.5 for December 2007.
In fact, during the entire George W. Bush presidency, consumer confidence hasn’t dipped as low as the lowest point of the Bill Clinton years (which was 58.6). The media, however, failed to apply the same hyperbolic negativity to Clinton’s low numbers that it has applied to Bush-era numbers.
The media seem to be always looking for a fresh way to give a downbeat view of the economy. The Consumer Confidence Index, a monthly measure of consumers’ opinion of the economy, provides a good news hook.
The survey polls 5,000 U.S. households, measuring consumers’ attitudes toward current economic conditions and their expectations for the future. The index was based on 100 in 1985. Current numbers reflect how much more (over 100) or less (under 100) optimistic consumers are now than they were in 1985. Data from before 1985 was recalculated to reflect confidence relative to what was felt in 1985.
But the media have failed to cover the survey’s findings consistently. They jump to report lower numbers, as evidenced in the steady decline during Fall 2007. But they completely ignored the six-year high confidence level seen in July.
Guthrie’s hyperbole isn’t a one-time mistake. Her error was just one in a long line of negative and often inaccurate network reports on current and historical consumer confidence numbers, especially in the last six months.
Where Do We Stand?
The last 12 months have included seven with consumer confidence numbers above the 100-point benchmark. Five months have been below the 100-point benchmark, only one of which marked a two-year low.
On might expect a “fair and balanced” media to present roughly equivalent reporting. Stories from February through August would have reported numbers above the benchmark, while reports from September 2007 through January 2008 would acknowledge lower numbers.
But in 32 stories mentioning consumer confidence numbers, only one story on the network news in the last year could be considered “positive.” On July 29, CNBC’s Maria Bartiromo said on the NBC “Nightly News” that, “As far as consumer confidence is concerned, things again, pretty resilient, despite the high price of oil.” But she qualified her optimism by adding, “I would expect that we see people a little less upbeat come Tuesday when that report comes out, given the market sell-off.”
“That report” actually showed July 2007 confidence numbers at a six-year high in spite of Bartiromo’s pessimism.
The other 31 stories were negative through and through. Eleven characterized the index as a “two-year low,” even though only November 2007 actually qualified as a two-year low. Networks described the numbers as “shaky,” “way down” and “dramatic” but never as “strong,” “upbeat” or even “above average.”
And the bias is longstanding, as the media have focused on low numbers during the Bush administration even though they ignored or sugar-coated lower numbers during the Clinton administration. Clinton’s low confidence – 58.6 in June 1993 – was reported as “down” while Bush’s lowest number – 61.4 in April 2003 – was “terribly low.”
Reporting the Index
Reporters view the index as newsworthy because it purports to show real people’s opinions about the economy. It provides a glimpse at how Americans – not pundits or economists or politicians – view the economy. But it also provides the media a way to perpetuate the view that the economy is tanking by focusing only on bad consumer confidence news and ignoring the good.
The most recent trend in negative consumer confidence reporting dates back to the release of consumer confidence numbers for August 2007. The decline in confidence from 111.9 in July to 105.6 in August was “the sharpest drop in consumer confidence in nearly two years,” according to Betsy Stark on the August 28 ABC “World News.”
Like Guthrie, however, Stark failed to check the numbers closely. The 6.3-point drop from July to August wasn’t the sharpest drop in two years – the index fell 6.8 points just one year earlier, from 107 in July 2006 to 100.2 in August 2006.
Stark failed to mention that the sharp decline didn’t even offset the sharp jump up from 105.3 in June 2007. She also didn’t mention that the July 2007 index was a six-year high.
The trend picked up steam from there. Even though the 105.6 index was above the 100-point baseline, and considering confidence had been lower just two months before and 13 times in the previous two years, the media persisted in reporting it negatively with descriptors like “way down” from ABC’s Bianna Golodryga, “plunged” from NBC’s Ann Curry, and “plummeted” from ABC’s Chris Cuomo.
Curry described the index at “its lowest level in nearly a year and a half.” Cuomo and Michelle Miller of the “CBS Evening News” characterized it as the “lowest level in two years.” They were all wrong, of course.
September consumer confidence numbers were released September 25. The index – 99.5 – was certainly lower than August, and in fact the lowest number in 22 months. The “two-year low” theme picked up steam, even though two years is 24 months.
Four reports following the release of the September numbers – three on NBC and one on CBS – included the inaccurate “two-year low” descriptor.
Numbers for October were released October 30. And the numbers finally caught up with previously inaccurate media hype. The 95.2 index was the lowest since October 2005’s 85.2. And the trend of negativity – and exaggeration – continued.
CBS “Evening News” anchor Katie Couric and NBC “Nightly News” anchor Brian Williams both accurately described the index as a two-year low. But NBC’s Margaret Brennan exaggerated the historical significance to a “three-year low.”
Coverage of November confidence numbers, released November 27 and showing another dip in confidence, was predictably negative. The “two-year low,” while barely accurate, was again the focus of much coverage. Bloomberg TV’s Deirdre Bolton called the index “a downer” on the November 28 CBS “Early Show.” Three other reports focused on the “two-year low” angle.
Lynn Franco, director of the Conference Board’s Consumer Research Center, told the Business & Media Institute that the media can have an effect on confidence numbers.
“Obviously it can have an impact,” she said. “You know for instance we’ve had a lot of sort of recent news on recession, no recession … a lot on sort of the spill over from the housing market and the credit crunch … and so that has, those types of events and factors really tend to impact consumers’ expectations.”
December 2007 showed a small reversal of fortune, with the confidence index ticking up slightly to 90.6. Think again if you thought that would mean a turnaround in the media’s portrayal of the numbers. Most places ignored the uptick. The first mention of December’s figures came from ABC’s Bianna Golodryga on “Good Morning America” January 10.
“It’s been a very real fear given that productivity and consumer confidence are down and unemployment is ticking up,” Golodryga said.
Guthrie made her inaccurate “all-time low” comment two days later on the NBC “Nightly News.”
None of the networks has yet reported on the January confidence numbers, released January 29, which showed a loss of most of the December gains, putting the index down to 87.9.
The media have been seemingly eager to report negative trends in consumer confidence in recent months, but they weren’t as eager to report bad economic news under President Bill Clinton, who saw confidence below the lowest of Bush’s tenure. The Business & Media Institute already documented the stark contrast between reporting about similar economic circumstances under the two administrations, in the Special Report “One Economy, Two Spins.”
June 1993 saw the lowest consumer confidence numbers of Clinton’s presidency. The media certainly didn’t report the 58.6 index as a “historic low” or even as a sign of a particularly troubling economy.
Susan Spencer reported the numbers as “down” on the June 29, 1993, CBS “Evening News.” She noted the numbers “fell for the fourth month in the last five and, more ominously, the leading economic indicators – signs of things to come – also were off 3/10 of a percent.”
Bill Plante reported the numbers had “declined” and “dropped” on the June 30 CBS “This Morning.”
All in all, the reporting on the low numbers was muted at best.
Consumer confidence has not dipped as low during George W. Bush’s presidency. It hit a low point of 61.4 in March 2003. But to hear the media tell the story, Bush’s low is much more than “down,” “declined” or “dropped.”
“Well, you know, consumer confidence surveys from the University of Michigan and The Conference Board both came out at their lowest levels in over 10 years,” financial advisor Ray Martin said on the April 2, 2003, CBS “Early Show.” He was wrong, of course, if just barely. The index had been lower late in 1993.
Elizabeth Vargas called the index “terribly low” on “Good Morning America” April 12.
Only the CBS “Morning News” reported the “big jump” in consumer confidence in April 2003, when the index rose from 61.4 to 81.
Good News Is No News
The failure to balance negative reporting of low confidence numbers with fair reporting of good news goes much further than the jump in April 2003 or the small increase in December 2007.
The broadcast networks eagerly reported when confidence began to slip in August 2007, but provided no context to the numbers. The July 2007 index of 111.9, according to Conference Board data and its press release, was the highest confidence in six years.
Where were the media reporting the six-year high, or even adding context to the lower August numbers? They were nowhere to be found. The broadcast networks ignored the six-year high. They also ignored a three-year high reached in June 2005 and a four-year high in April 2006.
The major print media did a little better. USA Today reported the July figures were “the highest in nearly a year.” The New York Times reported the six-year high. The Los Angeles Times said it was the highest confidence in “nearly” six years.
While the media were so eager to report disappointing news that they offered inaccurate historical context to lower numbers, they were reluctant to report positive changes in consumer confidence levels.
The danger inherent in focusing only on bad news is clear: if the public only gets one side of the story, the bad side, how can they be expected to understand the realities of the economy? The media’s control of the information can have a devastating effect on consumer confidence itself.
A few journalists seemed to understand the negative impact their own reporting is having.
On the NBC “Today” show January 17, host Matt Lauer asked CNBC host Jim Cramer about the media’s influence on public opinion. “People come up to me and say on the street … they say, ‘Why don’t you stop talking about recession? Because simply by talking about it, you’re going to freak out consumers and definitely push us into one,’” Lauer said. “Is there any logic to that thinking?”
Cramer said there was, and called on the media to “point out the positives with the negatives.”
CNBC’s Maria Bartiromo was more pointed in her caution to the media about harping only on negative news. “[T]he truth is, Meredith, it doesn’t matter if we’re in a recession,” Bartiromo told NBC “Today” host Meredith Vieira February 6. “We can talk ourselves into a recession, and that seems to be what we’re doing right now and that certainly begets more weakness.”
It’s encouraging to see members of the media being honest about their influence on public opinion. Whether or not their recent epiphanies will have any effect on their reporting, however, remains to be seen.
February confidence numbers should be released February 26.