November 8, 2005
According to Media, Most Economic News is Bad News
By Noel
Sheppard
The economy
has been growing at a very strong clip since October 2001. Real
estate prices are at their highest levels in history, as are homeownership
and Americans’ average net worth. Unemployment also is lower
than the average during any of the past three decades. Yet Americans
are very down, and one third even think the economy is in a recession.
Is consistently negative media coverage influencing public attitudes?
Might headlines like “Job growth less than expected”
and “Jobs come up weak” have something to do with
the gloom being felt across the country?
The Labor
Department announced unemployment numbers for October on November
4, and despite a decline in this rate and an addition to payrolls,
the media reported the gains as “surprisingly meager,”
“stalled,” “damped,” and “disappointing.”
As measured
by the gross domestic product, the economy has now grown by 3
percent or more for 10 straight quarters – a feat that hasn't
been achieved since the mid-’80s and never occurred during
the “boom” years of the ’90s. The unemployment
rate now stands at 5 percent.
But consumer
confidence as measured by the Conference Board, a non-profit economic
research and forecasting organization, is at 85, its lowest reading
since October 2003 when unemployment was 20 percent higher than
it is today. At the same time, according to Scott Rasmussen of
Rasmussen Reports, "34 percent believe the U.S. is in a recession."
And, a recent ABC News/Washington Post poll stated that 61 percent
of Americans disapprove of the way President Bush is handling
the economy.
Regardless
of what economic data is released by the various government agencies
responsible for such things, the media tend to report it as bad
news. When the press make pessimistic predictions that don’t
pan out, rarely will they revisit them or explain why they were
wrong. And when data is reported that is better than expected,
the press will often downplay it by suggesting that the numbers
are preliminary but could be revised lower later. When such revisions
actually improve the picture originally depicted, this too is
largely ignored. Some examples from coverage of the latest jobs
numbers:
* “Job
growth was surprisingly meager last month, the Labor Department
reported yesterday, in a sign that business executives have
become worried that the economic damage from high energy prices
might be growing.” The
New York Times
* “U.S.
job growth stalled last month, the Labor Department reported
yesterday, suggesting that employers remained cautious about
hiring because of high energy prices.” The
Washington Post
* “The
nation's job market rebounded last month from hurricane-related
losses, although the payroll gain was far below expectations
as high energy prices may have damped hiring in regions not
directly hit by the storms, the government reported Friday.”
The
Los Angeles Times
* “Job
growth resumed in October but came in well below economists'
forecasts, due to softness in the labor market nationwide, rather
than disruptions from Hurricane Katrina.” CNN/Money
These same
media outlets completely ignored their own gloomy and, as it turns
out, faulty predictions made for the labor markets and the economy
shortly after Katrina hit New Orleans. For example, as reported
by The Free Market Project, the Los Angeles Times’
Joel Havemann wrote on September 3, 2005: “Katrina's effects
— not only on the Gulf Coast regions where it struck but
also on the national economy via higher energy prices and disrupted
ports — could result in the loss of as many as 500,000 jobs.”
Nell Henderson
of the Washington Post wrote the same day: “Hurricane
Katrina, by forcing an exodus of workers and families from New
Orleans and surrounding areas, appears likely to rank alongside
Sept. 11, 2001, and the Arab oil embargo of 1973 as one of the
nation's most serious and sudden economic shocks – particularly
in terms of job losses – in recent memory.”
However,
when the September unemployment report came in much better than
the media had been forecasting – showing a loss of only
35,000 non-farm payroll jobs instead of the hundreds of thousands
that were forecast – the press downplayed this number by
stating that it was too early to tell just what the real impact
of Katrina was. Here’s how CNN/Money
categorized the September data: “Still, economists cautioned
that it was premature to say damage to the job market from Katrina
was minimal, noting it could take months to assess the full impact
of the storm.”
Well, it’s
now a month later, and the September report indeed was revised
– for the better. Instead of what many predicted in the
press, the Labor Department’s November 4 announcement
showed that the nation lost only 8,000 non-farm payroll jobs in
September as opposed to the 35,000 initially reported. Add to
that 56,000 jobs created in October. Adjusting the October gains
with the September losses, that means 48,000 new non-farm payroll
positions have been added since Katrina and Rita devastated the
Gulf Coast – instead of the hundreds of thousands that Americans
were told by the media would be lost.
Nevertheless,
Americans turned on their television sets the evening of November
4 to hear Brian Williams of NBC’s “Nightly News”
state:
“Back
here at home this busy Friday night, news on the economy and
the job market, still struggling to recover from a brutal hurricane
season. Employers boosted payrolls by just 56,000 last month.
That's well short of what economists were forecasting.”
And, they
opened their Saturday newspapers to learn why getting too large
of a raise can actually be bad for them. As reported
by the Associated Press’s Jeannine Aversa:
“A
wage barometer that economists monitor for signs of inflation
picked up strongly.
“Workers'
average hourly earnings rose to $16.27 in October, up 0.5 percent
from September. Wage gains are good for workers and can fuel
spending, an important ingredient to the economy's good health.
But a rapid pickup in wage growth can lead economists to fret
about inflation.”
This is
the largest monthly increase to average hourly wages since February
2003, and the AP and other media outlets depicted it as negative
due to its inflationary potential. However, for several years
the media have been reporting that the jobs being created in the
current recovery are low-paying, and that as a result, wage gains
are not keeping up with inflation. In fact, a Google search of
the phrase “wages lagging inflation” produced 188,000
results.
Nicholas
Riccardi of the Los Angeles Times wrote about this in
April in an article entitled “Wages Lagging Behind Prices”:
“For
the first time in 14 years, the American workforce has in effect
gotten an across-the-board pay cut.
“The
growth in wages in 2004 and the first two months of this year
trailed inflation, compounding the squeeze from higher housing,
energy and other costs.”
As a result,
after years of being told that they weren’t earning enough
money to make ends meet, Americans are now being informed that
receiving too much of a raise is also a bad thing. As such, it
appears that whatever economic data is released, the media tend
to report it as a cataclysm. Is it any wonder the public is so
gloomy?
Noel
Sheppard is an economist, business owner, and contributing writer
to The Free Market
Project. He is also contributing editor for the Media Research
Center’s NewsBusters.org.
Noel welcomes feedback at slep@danvillebc.com.
