TV journalists have been warning of “stagflation ,” a bursting housing bubble , and even “recession ,” but consumers are far more confident about the economy than journalists.
ABC’s Robin Roberts cautioned viewers about a major downturn. “The two-day sell off was sparked by concerns that the Federal Reserve could raise interest rates too much, cooling the economy to the point of recession,” she warned on the June 7 “Good Morning America.” That was after first-quarter growth had been revised up to 5.3 percent.
CBS’s Julie Chen echoed the negative tone. “Gas prices are rising, stock prices are slumping and consumer confidence is shaky at best,” she said on the May 18 “Early Show.”
Now the news is out that consumer confidence is up higher than forecast – from 104.7 in May to 105.7 in June. New home sales are up 4.6 percent – when they were expected to decline 4 percent.
So will this lift the media confidence index?
It’s doubtful, considering none of the three broadcast networks reported the rise in consumer confidence on the June 27 evening news shows, following the latest release.
Both CBS and ABC reported the April decline in that same number at the end of May. CBS anchor Bob Schieffer said viewers could “just connect the dots” on the May 30 “Evening News,” adding that “higher oil prices have led to a drop in consumer confidence in the economy, and Wall Street is worried that that will lead to a drop in spending.”
Bloomberg News reported on June 27 that “confidence among
A June 16 report from the
“Americans are feeling anxious about the economy this morning and they have plenty of reason to worry,” said ABC’s Betsy Stark on the June 15 “Good Morning
Despite such dire reports, economist and investment expert Larry Kudlow told Human Events in a June 13 interview that he was optimistic about the
As for the “slumping” stock market that worried journalists, Kudlow said it was due to inflated commodities like gold and “probably energy.” “Short-term interest rates will go up a little more,” he said, but “commodities are selling off.” “Even though it has shaken the market up, because commodities were the leader, it’s a good thing because it means inflation if going to stay low for the next five years.”
Housing: Bubble, or Break out the Bubbly?
Sales of new homes were up 4.6 percent in May – after “Wall Street had been expecting a 4 percent sales drop,” the Associated Press reported on June 27. That’s a difference of 8.6 percent.
But recent reporting on housing has been pessimistic, focusing on lagging existing-home sales. It is important to note that even a lag in sales means a decline from record highs. Reuters reported the National Association of Realtors’ projections in January 2006, saying that even if existing- and new-home sales dropped below the projected amounts this year, 2006 would still be the second-strongest year on record for both.
Also, the media haven’t seemed to catch on to the idea of a buyer’s or seller’s market.
On the CBS “Morning News” June 15 (6:30), Susan McGinnis said that “An ever-more-expensive housing market is helping to drive inflation upwards.” Trish Regan added, “Even with mortgage rates inching higher, prospective home buyers are anxious to get into the real estate market. The only problem? Prices are just too expensive.”
Maybe those would-be home buyers should talk to the subjects of ABC’s “Good Morning America” report, which came just a few days later on June 19. Reporter Heather Nauert lamented that a retired couple couldn’t sell their Virginia “McMansion.”
Her report included Jerry Howard, CEO of the National Association of Homebuilders, who said, “It’s taking a little longer to sell a home at all levels, whether it’s McMansion or entry level. So, therefore, they’re dropping the price down somewhat or even offering incentives.”
These reports didn’t acknowledge that price will be the factor that eventually unites sellers and buyers – and the market could turn in favor of the buyers, if the sellers give in and bring down their prices.
All the media frenzy about the housing market may be misguided, however. Kudlow told Human Events that “everybody obsesses about housing. Housing had to slow down because it had gone a little too far.” He added that other economic activity, such as commercial construction and investment in infrastructure, would “pick up a lot of the slack.”
Focusing on home buyers is misleading: “The economy is not driven by demand-side consumption,” Kudlow said. “The economy is driven by supply-side business expansion.” He attributed increased consumption to lower tax rates, which allow businesses to create more jobs, giving people income to spend.