Job Numbers Bring Out Worst-Case Scenario Reporting
Lower-than-expected job numbers on September 7 have given the media an excuse to pile on and advance recession fears.
“Stocks are on a roller coaster ride; the housing market in the dumps. And that has a few people worried about the ‘r’ word – recession,” said NBC “Today” anchor Meredith Vieira on September 10.
Likewise, a headline in the September 10 USA Today read “Job dips heighten fears of recession.” The Washington Post had a similar story in its September 7 issue, “Unexpected Loss of Jobs Raises Risk of Recession.”
And although everyone has known about the housing downturn for sometime now, it’s still being mentioned as an impetus for recession.
“With more families losing their homes to foreclosure, there are growing fears the housing slowdown could spark a full-blown recession,” said CNBC Business Reporter Scott Cohen on the September 10 “Today.”
But, as economist Ben Stein pointed out in the September 8 New York Times, the subprime housing woes have been exaggerated in the public eye.
“The percentage of those who have defaulted is still fairly small, possibly 10 percent to 15 percent of subprime loans, and maybe less,” Stein wrote. “(And subprime mortgages are very roughly 10 percent to 15 percent of mortgages.)”
All the talk of recession has caused NBC’s favorite economy analyst, Jim Cramer, to lobby for interest-rate cuts.
“[I]f we don't see rates come down, Meredith, then it seems entirely possible – it is up to the Fed, it is entirely possible that glass [referring to the half-empty/half-full analogy] goes down to here and there will be a recession,” said the CNBC “Mad Money” host on the September 10 “Today.” “They can do things about it. Things aren't so horrible that it's not too late. They will be three months from now.”
But Cramer did an about-face two hours later and indicated hope was lost.
“I got to agree with the bears,” Cramer said on CNBC’s “Squawk on the Street” shortly after his “Today” show appearance. “It doesn’t matter. The Fed is already too late.”
Cramer’s economic barometer has a history of being very erratic. He was labeled by Barron’s as the one-time “chief cheerleader for the bull market,” but when the stock markets started coming off their mid-summer highs, he said we had “Armageddon” with the economy during the “Stop Trading” segment on the August 3 CNBC “Street Smarts.”
Cramer’s CNBC colleague Larry Kudlow, host of “Kudlow & Company,” also has been lobbying for a Fed rate cut, but he’s not predicting a recession.
“Look, the economy is not imploding for heaven’s sakes. What we have here is a financial freeze-up,” said Kudlow on the September 7 “Hugh Hewitt Radio Show.” “This is manageable. I’ve seen worse situations than that, but they ought to take some action.”
And the latest job numbers don’t necessarily mean the worst is coming, according to one economist – and that view has been ignored by the media, including the September 10 “Today” segment.
“[D]on't forget employment is a lagging indicator,” said First Trust Portfolios Chief Economist Brian Wesbury on the September 7 “Kudlow & Company.”
“The economy was slow up through March; now we're seeing some slow employment,” Wesbury explained. “Also remember that the household survey captures the self-employed, which is a lot of the housing market and that’s why it’s not showing up in the payroll. And also, underneath that weakness in the housing number was a loss in agricultural jobs and paid household workers, which is illegal immigrants, and we're chasing them from the country.”
Of course, with presidential campaigning in full swing, the economy presents a huge political angle – which makes even-handed reporting all the more important.
“At the moment, it [the economy] could be a problem for the GOP,” said Kudlow on the September 7 “Hugh Hewitt Radio Show.” “They got to speak up about pro-growth policies.”