Economist on the Media and Recession

For quite some time I have been telling readers of this blog and listeners of my show that the media has wanted a recession. Furthermore, the media has reported an economy in decline while it reflected numbers reminiscent of a strong economy. Now a serious leader in academia has recently validated this assessment.

Economist John Lott, Jr. of the University of Maryland was cited on Fox and Friends as quantifying the distorted views purported by the media about the economy. In an article by Lott on FoxNews.com, the scholar noted that:

A Nexis search on news stories during the three-month period from July 2000 through September 2000 using the keywords “economy recession US” produces 1,388. By contrast, the same search over just the last month finds 3,166. Or, even more telling, take the three months from July through September last year, when the GDP was growing at a phenomenal 4.9 percent. The same type of Google search shows 2,475 news stories.

Over 78 percent more negative news stories discussed a recession when the economy under a Republican was soaring than occurred under a Democrat when the economy was shrinking.
A little perspective on the economy would be helpful. The average unemployment rate during President Clinton was 5.2 percent. The average under President George W. Bush is just slightly below 5.2. The current unemployment rate is 4.8 percent, almost half a percentage point lower than these averages.

Therefore the economy was seen as healthy and vibrant under Clinton with higher unemployment than it is today under Bush at level that is .4 percent lower. The comparison doesn't stop with unemployment, however:

The average inflation rate under Clinton was 2.6 percent, under Bush it is 2.7 percent. Indeed, one has to go back to the Kennedy administration to find a lower average rate. True the inflation rate over the last year has gone up to 4 percent, but that is still lower than the average inflation rate under all the presidents from Nixon through Bush’s father.

Yet, again, the news tends to describe the economic situation in this economy as dire and you would think we were at the brink of economic ruin. Lott goes on to quantify other areas.

The issue I would love to see discussed more thoroughly are the reasons why this is happening. All I can do is speculate, based on approximately two decades of being involved with the media on several levels, but the causes could include:

* The liberal bias in the media. According to the Pew Research Center, there are five liberals for every one conservative in the media. This would certainly lead to the media giving Conservatives a negative spin.

* I personally believe that the media benefits from a bad economy. Much of what we have seen and heard has reflected "wishful" thinking. Why? When the economy is hot, businesses simply don't need as much advertising. A soft economy makes businesses more inclined to invest in marketing.

* Finally, bad news equals big ratings. There is a belief that if all news was good news, people would not be nearly as interested in watching TV, listening on the radio, or reading stories.

I'm impressed with Lott's work and am eager to find more who contribute to this debate.

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Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.