Media Make Economic Storms Out of Silver Linings
The American news media declared the U.S. economy in “free fall” as it slowed in March of 2008. But much economic data hasn’t supported that negative view. Recently journalists have wrung the negatives out of stronger-than-expected numbers for retail sales, consumer spending and economic growth, as well as lower-than-anticipated job losses.
“The job market is crumbling,” complained CBS’s Bianca Solorzano on March 3, 2008, despite an unemployment rate of about 4.8 percent. By contrast, ABC reporter Jerry King called the summer of 1996 under President Bill Clinton a time of “strong economic growth and low unemployment” on the Aug. 4, 1996, “World News Tonight.” At that time the unemployment rate stood six-tenths of a percent higher at 5.4 percent.
When the roughly $13.8-trillion economy grew by 0.6 percent in the first quarter of 2008, ABC’s Betsy Stark described the economy with a very serious medical term saying it “flat-lined.” Other reporters called the growth “anemic” and “tepid.”
But now “[M]any economists think the government’s earliest estimate of first-quarter GDP growth – 0.6 percent – will be revised upward,” according to the May 14 Wall Street Journal. The Journal was even more upbeat, saying “Despite Pain, Economists Begin Dialing Back Dire Forecasts.” According to the article, Wachovia Corp. has lowered its odds of recession to 45 percent, down from 90 percent just last month.
Some media outlets reported positive news but warned people not to get the wrong idea, or even suggested it confirmed “recession” fears.
A May 8 story on CNBC.com presented the good news on retail sales: “It is irrefutable that [same-store] sales in April were much better than expected.” But Margaret Brennan’s article was full of caution, cheekily warning readers with an LL Cool J quote: “Don’t call it a comeback!”
That wasn’t all. The New York Times claimed the lower-than-expected job losses proved the country is “ensnared in a recession.”
George Stephanopoulos was right on March 13 when he said, “Everywhere you look, it’s bad news.”
Expecting the Worst
The media often announced what experts “expected” before economic data were released, but weren’t always on target. When “better-than-expected” information came out, journalists would usually mention it, but rarely with a positive tone.
For example, in April the United States lost 55,000 fewer jobs than the anticipated 75,000. Trish Regan had been concerned about jobs on the May 1 “NBC Nightly News.”
“If worries over food and gas prices aren’t enough, there’s also the concern about jobs. Some poor weekly numbers out today; this is ahead of tomorrow’s all-important April jobs report. The unemployment rate is expected to tick higher with as many as 75,000 jobs lost last month,” said Regan.
Regan’s follow-up report after the release of the actual figure of 20,000 jobs lost was one of the few that proclaimed it as a “good sign” for the economy.
By comparison, “Good Morning America’s” Kate Snow also presented the negative forecast on May 2: “New figures due out this morning could provide fresh evidence of a recession. Economists expect the April jobs report will show employers slashed jobs for the fourth straight month. They expect the unemployment rate rose to the highest level in three years.”
But the next morning when Snow mentioned the 20,000 jobs cut, she said “many economists say it’s the latest sign that we are in recession.” It was correspondent Bianna Golodryga who admitted the report “showed fewer losses than expected” before chiming in on the recession.
“[W]e’re technically not in a recession. But for millions of Americans unable to save any money as they struggle with high gas prices and food prices, technicalities are just that,” said Golodryga on “Good Morning America” May 3.
Back in September 2007, Golodryga hyped “fears” about job loss after the preliminary government release indicated a loss of 4,000 jobs in August. The ABC correspondent was quick to promote recession hype in her report, “Road to Recession.” Later, the September jobs report included a revision to August indicating 89,000 jobs were created.
The May 2 Washington Post and The New York Times both reported the expectation of a 75,000 net loss of jobs in April. “Investors are predicting another gloomy reading on U.S. employment Friday,” said the Post. The Times reported “a big reduction in jobs and increase in unemployment could put a damper on Wall Street’s enthusiasm.”
The next day the Post reported fewer job cuts as good news, while the Times sounded more like “Good Morning America.”
The Times claimed on May 3 that “many economists took [the jobs release] as powerful evidence that the United States is almost certainly now ensnared in a recession.”
The May 3 Post was less dire, reporting it as the “latest evidence that the U.S. economy is undergoing a mediocre spell, rather than a disastrous downturn.”
“[T]he employment numbers, coupled with a reading on the gross domestic product this week and other recent data, have cheered economists and traders in financial markets,” the Post continued.
Back in early April, “Good Morning America” “expected” the unemployment rate “to continue climbing,” according to Golodryga. “Out of work. Unemployment Rising Fast,” warned the onscreen text.
In that April 5 segment, she interviewed Tig Gilliam of Adecco North America, a temp placement agency, who said, “We’re expecting the unemployment rate to rise, to as much as 5.5 percent, over the course of the first half of 2008. And I think we have to put that in perspective.”
Since then, Gilliam has been more upbeat. On May 2, he told CNNMoney.com, “It’s hard to get real upset about 95 percent employment, given everything else going on with the credit markets and energy prices. The job market, as far as I’m concerned, is the silver lining in the storm cloud.”
Economist Irwin Stelzer of The Hudson Institute said in a column May 13, “there is more cheer available to those willing to dig into the back pages of newspapers. Exports are up, the unemployment rate remains low, and earnings of nonfinancial companies were up more than 10 percent in the first quarter.”
Retail Sales Figures Ignored or Distorted
Retail sales figures that beat expectations were also distorted or ignored by the downbeat media.
Bloomberg reported economists it surveyed expected a 0.2-percent decline in overall retail sales in a report on May 11. But that story didn’t mention higher-than-anticipated same-store sales released just days earlier.
“Sales at U.S. retailers probably fell in April as the biggest housing slump in a quarter century, record gasoline prices and the loss of jobs took their toll, economists said before reports this week,” said a Bloomberg.com story on May 11.
Same-store retail sales actually saw a 3.6-percent gain over a “projection of only 2 percent growth.” According to that CNBC.com story, “It is irrefutable that sales in April were much better than expected.”
The three major networks have mostly ignored the retail figures. A Nexis search found only one report by the CBS “Early Show” – it was three sentences long.
But some economists were encouraged by the retail sales data. “After reviewing the retail-sales data, economists at Global Insight, a Waltham, Mass.-based forecasting firm, predicted the government would increase its assessment of GDP growth in the first quarter to 1 percent at an annual rate,” according to the May 14 Wall Street Journal.
MarketWatch also reported the retail sales report as positive news.
“Excluding the 2.8 percent drop in motor vehicle sales, retail sales rose 0.5 percent, stronger than the 0.2 percent gain expected and the biggest increase since January,” MarketWatch reported. “Excluding autos and gasoline, sales rose 0.6 percent, the best performance since November.”
What did it all mean? According to MarketWatch, “Economists said the report showed consumers were resilient, as borne out by autos taking most of the brunt in April's lower sales.”
Even Bloomberg was upbeat on May 13: “Retail sales in the U.S. fell in April, led by a slump in auto purchases that masked stronger-than-forecast gains elsewhere, indicating rising energy bills and a faltering labor market haven't stopped Americans from shopping.”
CBS’s Spin Cycle
CBS remains the consistent leader of negative economic reporting on network television, and that was no exception as the jobs and consumer spending data were released.
Katie Couric presented the “not quite as bad as it has been” news on May 2 that April job losses were lower than expected, but any encouragement that might have provided was wiped out by Anthony Mason’s report that followed.
Mason quoted an unidentified man who claimed, “It’s hard to find a job. Most companies are closing down.” Mason didn’t refute the point; instead, he went on to say “as the economy lost jobs for the fourth straight month, construction, manufacturing and retail took the hardest hit.”
Just a day earlier, after the Commerce Department announced the increase in consumer spending for March, Couric went negative by blaming the good news on food inflation.
“[T]he government reported today that consumer spending in March shot up twice as much as economists were expecting, and it’s not because we’re buying more – it’s because the prices are so much higher, especially food,” said Katie Couric on May 1.
Consumer spending went up 0.4 percent in March, according to the Commerce Department – doubling the forecasts.
Like Couric, the Associated Press also placed the blame on higher costs. “Don’t be fooled by a larger-than-expected increase in consumer spending,” warned a May 1 AP article. “People aren’t buying more – they’re just paying more for what they buy.”
But that’s not accurate, according to economist Dr. John Lott.
“The first notion that somehow you could explain the entire increase in consumer spending is due to higher prices – if you double consumer spending, the only way that statement would make sense is if the price level doubled in a month,” said Lott, who is also a BMI adviser.
That May 1 “Evening News” segment focused on food prices that “skyrocketed” including flour, eggs, milk and pasta, which Lott also said distorts the picture of food inflation.
“When you’re talking about all food, you’re not spending it all on pasta. Some portion of it is going up, but oranges have fallen by like 35 percent. You have drops in the price of lettuce and other things, too. And the average on the course of a year is going up about 5 percent – that’s the relevant number,” explained Lott.
So Here’s the Good News …
Occasionally the media did a better job at handling the economic data.
Just three days after Trish Regan reported that “The unemployment rate is expected to tick higher with as many as 75,000 jobs lost last month,” she appeared on “Today” to discuss the release of job figures.
Amy Robach began the NBC segment, “First, the bad. Twenty thousand more jobs were lost in April, the fourth consecutive month of decline, but that number is significantly less than what analysts had envisioned. So could that mean things are about to turn around?”
“Well, it is a good sign,” Regan responded, “because, you know, people had anticipated that there could be as many as 75,000 jobs lost this time.” Regan even called 5 percent unemployment “relatively low.”
U.S. News & World Report’s money and politics blogger James Pethokoukis recently shared “10 Reasons to Feel Good About the Economy.”
One of those was a quote from Bruce Kasman of JPMorgan Chase: “The economy is unlikely to fall into a hole so deep that it will contract despite the infusion of tax rebates. We continue to see GDP growth in slightly positive territory in the middle two quarters of the year as the boost from rebates offsets a mild recession dynamic.”
In contrast to the recently pessimistic economic coverage on networks and in print, The Wall Street Journal presented another view May 14 in an article called “Recession? Not So Fast, Say Some.”
According to the article, “a growing number of economists” no longer say a recession is inevitable. “Things have changed,” said Jay Bryson, a global economist with Wachovia Corp. “The numbers we’ve seen recently haven’t been as bad as we were led to believe just a few months ago.”
Wachovia has even downgraded its odds of recession at 45 percent, “down from 90 percent in April,” the Journal reported.