As a major stock index rose to “uncharted territory,” the media collectively frowned instead of celebrating.
After 9/11 the stock markets plunged, but they began to recover after the passage of the 2003 Bush tax cuts. The Dow climbed back up to the 10,000 mark by the end of 2003 and 11,000 in early 2006. But it also rose to unprecedented heights, setting new records at 12,000 last October and 13,000 in April 2007.
Despite this tremendous recovery, which had investors cheering, network journalists on ABC, NBC and CBS frequently spun the news negatively: worrying about other economic factors like gas prices and housing, and making predictions that the Dow wouldn’t be able to keep climbing.
“Even as investors are making money in the market, Anthony Mason reports there are concerns tonight about the rest of the U.S. economy,” complained “CBS Evening News” anchor Katie Couric on the day the Dow closed above 13,000 for the very first time.
Mason also declared “Wall Street and Main Street appear to be headed in different directions,” on April 25, ignoring all the shareholders – many of whom are average Americans – benefiting from the stock rise.
Economist Lawrence Kudlow, on the other hand, found reason to celebrate.
“This is the longest, uninterrupted, correctionless, bull-market run in memory,” Kudlow said on his CNBC program April 25.
Kudlow explained that stocks lead the economy, so more growth could be on its way. He has also remarked that being overly focused on the housing market is misleading, but that’s what ABC did.
“World News” anchor Charles Gibson asked on April 25: “But is the economy as hot as the market?” Then reporter Betsy Stark brought up “trouble” in the housing market, and rising oil prices.
Overall, CBS reporting has been the worst. When the Dow broke 10,000 on Dec. 11, 2003 – for the first time after the terrorist attacks, financial scandals and the dot-com bust – Anthony Mason declared there were “no party hats for Dow 10,000 this time.”
At 11,000, CBS reporter Susan McGinnis said “experts are cautiously optimistic,” and by 12,000, CBS journalists were busily declaring that higher oil prices could stop the bulls from running – a point Anthony Mason made again at 13,000.
The Dow, or the Dow Jones Industrial Average (DJIA), is a stock index that tracks 30 of the largest public U.S. companies. Exxon Mobil Corp., AT&T Inc., Coca-Cola Co., and Walt Disney Co. are just a few of the 30 well known corporations included in the DJIA. Its worth is measured not in dollars but in points, and new record highs in point value (such as 13,000) show the stocks have gained in average value.
The ABC and CBS reactions to the 13,000 marker were very different from the response of economics writer Steve Moore of The Wall Street Journal.
“I just can’t help smiling today because I think it was six weeks ago when the market dropped by 400 points, I was the one saying, ‘Hey, stick with the market. We’re gonna see record highs,’” Moore said on the April 25 broadcast of CNBC’s “Kudlow & Company.”
While CBS reporters were almost consistently negative about the Dow Jones Industrial Average's new heights, ABC and NBC evening and morning newscasts also joined in the naysaying.
On Oct. 20, 2006, the day after the DJIA set a record at 12,000 points, NBC “Nightly News” anchor Brian Williams downplayed the milestone and said, “stocks ended this week narrowly mixed.”
The Market Is Up, But …
As the Dow hit milestone after milestone, the broadcast media theme was “This is good, but can it continue?”
“It is a big shot of optimism, but the question I think on everyone's mind is, does the market continue to go up?” asked Charles Gibson on ABC’s “Good Morning America” on Jan. 10, 2006. That was one day after the Dow reached the 11,000 mark for the first time since before 9/11. It did, of course, continue upward, reaching an all-time high of more than 13,000 on April 25, 2007.
CBS “Early Show” also offered a cautious expert on Jan. 10, 2006. Liz Ann Sonders of Charles Schwab told viewers she considered optimism “as a little bit more of a warning sign than anything else.”
Sonders reappeared on the April 25, 2007, CBS “Evening News” and mentioned bad economic news – the day the Dow reached 13,000.
This negativity toward rising stocks led to media predictions about what would prevent the Dow from climbing upward.
ABC’s Betsy Stark uttered worries about the housing market and about oil and gas prices on the Oct. 20, 2006, “Good Morning America,” just before Kate Snow led into a segment about potentially rising gas prices.
Harry Smith echoed that theme on “The Early Show” on the same day.
“After hitting 12,000 for the first time in history, the blue chips could come under pressure from higher oil prices,” said Smith.
What Bush Recovery?
While a number of economists credit the stock market recovery to Bush's tax cuts that were passed on May 23, 2003, that admission could barely be found in ABC, CBS and NBC morning and evening newscasts as the Dow recovered.
In most stories there was also no sense of the benefit rising stocks have for many people. But a senior writer with U.S. News & World Report recently explained both the tax cuts’ connection to the stock market rebound and how much wealth has been created in the Bush recovery.
“Since [the Bush tax cuts], the Dow is up 52 percent, the S&P 500 60 percent, and the Nasdaq 69 percent. (Overall, the stock market has created some $6.8 trillion in new wealth since then as the size of the economy has grown by some $2.8 trillion, not adjusted for inflation.),” explained James Pethokoukis.
Kudlow agreed that the Bush tax cuts created the “Goldilocks economy.”
The negative view of the economy seen in network news – with worries about multiple sectors – is dramatically different from Kudlow’s view.
“[D]on’t stocks lead the economy by six, nine, 12 months? And, in fact, isn’t the stock market revival over the past, whatever, six to nine months, telling us, A, soft landing, B, better times ahead?” Kudlow asked chief economist of Nomura Securities David Resler on April 26.
Resler, a guest of “Kudlow & Company” on CNBC, agreed.
The Wall Street Journal seemed to echo that hope on April 28 in a news article titled “Economy Slows But May Hold Seeds of Growth.”
The writers stated that first-quarter growth of the U.S. economy was “below economists’ expectations,” but in the report from the Commerce Department “many economists found reason to believe the economy has hit its low point” and should see growth in the coming months.