The state of our economy has become a somewhat constructed fantasy
created to an extent by mainstream media (MSM) narratives. Media accounts of economic performance over the past four years have ranged from confusing to
inaccurate to flagrant happy talk and spin. Rationalization and selective reporting of factual
information has created economic ‘good’ news and false ‘hopes’ where none existed
or should exist. The techniques employed
have included a consistently biased meme, factual omission, factual commission,
and even misdirection. Often narratives
have suggested that improvement would occur tomorrow…or next
week or next year. The effect on
Americans has been a growing separation between economic reality and the media’s
economic illusion.
The ‘measured’ beliefs of many Americans clearly demonstrate
that a disconnect does exist. But are
the cited causes the only explanation for this distortion? Or is the statistical economic snow just too
much and too boring for people to digest?
Perhaps Americans lack even a minimal understanding of the somewhat
opaque concepts and statistical mechanics of economics. Or is it
because current information is not compared and contrasted to previous months
and years with regularity to highlight trends and help understanding? Or has a ‘new economic normal’ actually taken
hold in the minds of most individuals?
These possibilities and others are contributing factors and can be added
to the media causes degrading a realistic understanding of our troubled
economy.
The public’s disconnect is seen in both polling and
measurements of their confidence. Polling indicates that
the American people think the economy has improved since 2009. In March, Pew Research discovered that
58% believed the economy is recovering or would recover soon verses 40% stating
an economic resurgence wouldn’t occur for a long time. This result compares to their December 2010 poll
which surfaced 40% thinking the economy was recovering or would soon improve
while 48% felt that economic improvement was in the distant future. Similar polls by ABC,
NBC, Fox News, CNN and CBS largely demonstrate similar results. Additionally, consumer
confidence declined from 68.0 in February to 59.7 in March. Although confidence has been very erratic over
time, it has been gradually trending up since 2009. Neither the polling nor the confidence trend
makes sense in the face of the economy’s actual decline since 2009.
The overall state and direction of the economy can be
illustrated by a few important factors.
- Gross domestic product (GDP) has declined since 2010 when it equaled 2.4% in average quarterly growth (growth greater than 3.0% is considered fair and above 4.0%, good). GDP in 2011 fell to 2.0% and then sank to only to 1.7% in 2012. The fourth quarter of 2012 saw an anemic .4% in positive GDP activity. In sum the cumulative GDP growth for the 12 quarters following the recent recession was 7.2%. The number translates into the slowest GDP growth rate after a recession in years when compared to 11 previous recessions…where average growth exceeded 15% for a similar 12 quarter period.
- 4.5 million fewer Americans are working today than when the recession began and amazingly fewer are working today than in 2000. This is more astonishing when accounting for a labor force increase of 11.4 million since that date. And the White House prediction in 2009 that with a stimulus plan a 5.2% jobless rate would be realized by now…yet the unemployment rate is 7.6% (U3) and a more accurate measure equals 13.8% (U6) -- per the Bureau of Labor statistics (BLS) unemployment measures.
- 89,967,000 eligible Americans are currently not in the labor force. In March 2009, 80,944,000 able bodied workers were sitting on the side lines. The difference between dates totals 9,770,000 or an increase of 11.0% in the number of individual workers essentially giving up hope of employment. The number of people leaving the labor pool or simply dropping out causes the unemployment rate to be misleading. In March 496,000 workers dropped out of the workforce and the unemployment rate (U3) declined to 7.6%...if these workers had chosen to continue searching for jobs the unemployment rate would have grown from 7.7% to 7.9%. Further if today’s labor participation rate was at January 2009 levels the unemployment rate would equal 10.98%. Jobs remain critical to a healthy and robust economy. Yet meaningful job creation simply hasn’t occurred since the recession ended in early 2009.
- Food stamp usage has grown to 47.8 million participants (15% of total population today verses 7.9% from 1970 to 2000), an increase of 70% since 2008. This support system continues to rapidly expand and preliminary 2013 numbers indicate that the program will soon have 50.0 million users. The astounding growth is driven by not just the moribund economy and a lack of jobs but a loosening of the standards for inclusion in the program…an increase in a participant’s allowable asset and income thresholds. Concurrently poverty has grown precipitously to almost 50.0 million, a level not seen since the mid-1960s. In fact one in six Americans is now in poverty.
- America is in danger of losing 1.7 million of our young workers (18-29 years) to the misery of our economy since they have abandoned their efforts to secure employment. Many of these people have college degrees and are faced with the reality of much lower wages, older workers staying in their careers longer and only the availability of part time or hourly wage opportunities.
The use of adjectives and phrases that do not fit the facts are
often found in economic articles. An
egregious but not unusual example by the Associated Press’ economics writer is worth review. Even the story’s headline, "US economy expands at 0.4 percent rate", is misleading. In economic terms a .4% increase in GDP is
hardly expansion...in fact it is considered economic stagnation. The opening paragraph says the .4% rate is
anemic yet follows that assertion with, “[T]here is hope that growth
accelerated in early 2013” without giving a reason for that hope. It’s stated later that, “Analysts think the
economy is growing at a rate of around 2.5%”, again without a rationale/support
or any identification of the unnamed analysts.
The narrative continues with unsupported positive speculation to its
end.
Another example of the media’s unrealistic and overly
optimistic slant is illustrated in a Business & Money story. The narrative reviews the BLS’s employment release for March 2013.
The writer states that the “Labor Department’s employment situation
reports have been generally positive since November of last year” without
establishing a standard to measure that judgment. But later in the 4th paragraph it
is posited that the report is much better than a first glance suggests and in
the next segment the reader is told why.
The author uses the increase in employment realized due to a revision in
two prior months and adds the amount to the March total of 88,000 new jobs to
reach a contrived but still mediocre sum of 146,000 jobs (incidentally the
correct math is 149,000 jobs). And the
masking of reality continued… e.g. a stated reason for the massive reduction of
496,000 in the workforce may have been due to unusually high retirement levels
(yet BLS employment statistics clearly demonstrate that older people are
delaying their retirement).
Although only a few examples of bias, confusing or
manipulative reporting are identified, a critical read of a majority of
economic stories in the press will simply emphasize the findings presented. Given the facts, media bias and manipulation
is a valid and important reason -- of many -- for the gap between the public’s
perception of the economy and its actual condition.
