Recent polls of economists by leading financial publications have predicted a less than 50-percent chance that the U.S. economy will enter a recession in 2008. But the media’s coverage of “recession” makes it seem inevitable.
“Everyone’s talking about a recession,” Amy Robach reported on the “Today” show January 12.
The broadcast media mentioned the economy or a recession in 54 stories during the first two weeks of 2008. The segments predicted a recession or reported fears of a looming recession four times as often as they reported optimism about the New Year, even though recent surveys of economists put the chance of recession at 40 percent to 42 percent.
ABC, CBS and NBC reported “more signs of a looming recession,” “deepening troubles,” “new fuel for recession fears,” “rattled consumers,” “an economy on edge” and “bracing for recession,” or some scary variation a total of 32 times. They mentioned positive predictions in only eight stories.
“And the major concern heading into 2008 is that big ‘R’ word, recession,” David Muir ominously reported on January 1. “When does the mortgage mess, the housing market, lead to that?” he asked, assuming that a mortgage “mess” inevitably leads to recession.
ABC reported “growing concerns the economy may be heading toward recession.” CBS mentioned that “when companies stop hiring, it’s often a sign we’re slipping into a recession.” NBC noticed that in a speech about the economy, President Bush “stopped short of warning that America may be sliding into a recession.”
On the “Evening News” January 9, Anthony Mason reported that Goldman Sachs became the third “major Wall Street firm in the past week to forecast a recession,” neglecting to mention a survey of economists showing most did not predict a recession.
Ignoring the Polls
A survey of 62 economists conducted by Bloomberg News and released January 9 showed those economists predicting 1.5-percent growth in the first half of 2008. While that rate of expansion would be the weakest since the last nine months of 2001, it would still be growth. The economists also put the chances of recession in 2008 at 40 percent.
A similar survey by the Wall Street Journal found comparable results. In that poll economists put the chance of recession at 42 percent and predicted growth of less than 2 percent.
Did the media focus on these polls? Not exactly.
“Right now most economists are saying you’ve got to worry about growth first and foremost,” Erin Burnett reported on the “Today” show January 10.
Maria Bartiromo’s “Nightly News” report on January 11 featured interviews with three people predicting a recession. She didn’t bother to find anyone to add optimism to the discussion.
One of her sources – Chicago-area roofing and siding shop owner Carl Maturo – said he’s had to lay off 14 employees in the past six weeks. The report didn’t say how winter weather could have affected that industry.
“It’s soft economic activity that feels like a recession, but we probably won’t have one,” Mickey Levy, chief economist at Bank of America Corp., told Bloomberg. “The state of the consumer is clearly softening, but spending is not declining. That’s very important.”
Jay Bryson, a global economist at Wachovia Corp., said, “We’re skating on the thin edge of recession, but we’ll narrowly miss one” because “the consumer … has remained relatively resilient.”
James O’Sullivan, a senior economist at UBC Securities LLC, told Bloomberg News “the debate here is whether the economy is quite weak or whether it is falling into a recession. So far, I’m in the quite-weak camp.” While O’Sullivan was not unrealistically cheery, he could have offered some balance to the standard media line of inevitable recession.
Only one broadcast reported the Bloomberg poll. Deirdre Bolton, a Bloomberg TV anchor, mentioned the poll on the January 9 CBS “The Early Show.” She didn’t mention the prediction for growth, but did note the poll’s finding that the economists predicted a 40-percent chance of recession.
In one other case, Katie Couric spun the results of the Wall Street Journal poll, which put the likelihood of recession at 42 percent. But Couric didn’t emphasize the fact that economists still put the likelihood of recession below 50 percent. Instead, she focused on the fact that the number predicting a recession was up over six months ago, when economists put the change of a recession at 23 percent.
Even when the media did acknowledge that the inevitability of a recession isn’t “settled science,” they failed to provide voices of optimism.
A January 12 “Saturday Early Show” report from Kelly Wallace acknowledged that “economists disagree over whether we’re headed into a recession.” But the only person Wallace interviewed for the segment was Russell Pearlman, senior markets editor for “SmartMoney,” who said, “You need to plan for the idea that the U.S. economy is not in as good of shape now as it was certainly five years ago and even six months ago.”
On the CBS “Evening News” January 11, reporter Sandra Hughes said “experts argue over whether there’s one coming,” but didn’t bother to interview any economists who don’t expect a recession. She interviewed only Dean and Dori Julian, a couple who said they had to take their child out of private school and are considering selling their vacation home because they perceive a recession coming.
The only economist cited as not predicting a recession was Federal Reserve Chairman Ben Bernanke (although many reports’ analysis put “the ‘R’ word” into his mouth). On the January 10 ABC “World News with Charles Gibson,” the anchor pointed out that Bernanke “is not forecasting a recession.”
But reporter Betsy Stark followed that up with a blast of clips from others like former Fed Chairman Alan Greenspan and leading Democrats predicting a recession. She said the fear of recession “is contagious no matter how wealthy you are.”
The release of disappointing December employment figures provided significant fodder for the media’s Chicken Little-ing. Eight of the economy stories mentioned the 5-percent unemployment rate being the highest in two years, but only three put the numbers in perspective.
On “World News” January 4, Charles Gibson reported the “dismal news” that just 18,000 new jobs were created in December, adding, “And the unemployment rate rose sharply to 5 percent. That’s the highest in two years.”
Reporter Betsy Stark tied the “dismal news” to the media’s love of recession, noting that “economists say rising unemployment in ’08 on top of a housing slump, a credit crunch and $100 oil is bound to be a toxic combination.” She concluded that “it will take good policies and good luck to avoid a recession now.” (In 2006, the media relied on the combination of the Federal Reserve, the housing market and oil prices in its unfulfilled prophecies of a recession.)
“Yesterday’s job numbers are just the latest bad news on the economic front,” Savannah Guthrie reported on the “Today” show January 5, the morning after Katie Couric declared on CBS that “unemployment edges up to 5 percent last month, the highest rate in two years.”
That’s almost true. The Bureau of Labor Statistics reported that unemployment was at 5.1 percent in September 2005. The 5 percent rate is the highest in 16 months. It’s also below the 5.4-percent 10-year average and the 6-percent 30-year average.
ABC was the only network to mention the new figures in the context of long-term averages. “[T]he silver lining is for the past 30 years, the average unemployment rate has been 6 percent. So 5 percent is a very good unemployment rate,” reporter Bianna Golodryga said on “World News Sunday” January 6.
On January 10, financial contributor Mellody Hobson echoed Golodryga’s context, reminding “Good Morning America” viewers the “unemployment rate has gone up, but it’s still at 5 percent historic lows.”
Steve Liesman of NBC’s “Nightly News” also tried to put the numbers into perspective. He didn’t cite the historical data Golodryga favored, but suggested putting the numbers “into some kind of context here. Ninety-five percent of Americans are still employed.”
Recipe for Recession
Even if there is no recession, the media tell us, it’s going to feel like one and we’re all going to suffer. The media pessimism leads to widespread public pessimism, if not directly to a recession itself.
“[E]ven if the numbers never add up to an official recession, things can slow down so much that it still feels like a recession,” Betsy Stark said on the January 10 “World News.” “In parts of the country hit hard by the housing slump, it sure feels like a recession already.”
CNBC’s Maria Bartiromo said recession “is all psychological. Because when people have fear and expectations that things are going to worsen, they pull their spending. They slow down and become cautious and then they actually push into one anyway.”
Media outlets largely fail to recognize their role in paving the way toward recession. With incessant negative reporting, dotted only sporadically with positive reports, the media are contributing to consumers’ fears. But analysts recognize the correlation.
“We have to hope that the consumer doesn’t decide there’s a real recession coming because then they’ll close their pocketbook and we’ll really have one,” Bill Seidman, an NBC financial analyst, said on the January 10 “Nightly News.”
There were some “bright spots.” On January 1, CNBC host Jim Cramer appeared on the “Today” show to give his predictions for the New Year. “This is going to be another good year,” he said. Cramer didn’t mention the word “recession,” but said there’s a lot of good things happening.”
In a January 10 appearance on “Good Morning America,” financial contributor Mellody Hobson, president of Ariel Capital Management, warned that “all signs are pointing” to a recession, but noted that “there are a couple of bright spots. One, holiday spending beat expectations. And because we’re in an election year, that could be a very good thing. We typically don’t see a recession during an election year.”
On the January 14 “Nightly News,” CNBC reporter Maria Bartiromo noted that “technically we have not seen the recession yet,” and “There are some reasons to be positive. The global economies continue to see a dynamic story. We have not seen any cracks to that yet. And America is benefiting from that. So we’ll see.”
On “The Tonight Show” January 9, Bartiromo said “right now we are looking at a real weak situation in the U.S. It may not be recessionary, it may – we could be on the cusp. But, it’s very important that the economies around the world grow and that there are open markets so that our companies can actually get a piece of that action – 1.3 billion people in China, we need that market.”
Erin Burnett reported on the January 12 “Today” show, amid much talk of a looming recession, that “as long as employment continues to grow, we probably won’t have a full-blown recession.”