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February 11, 2008

Made-for-TV Recession: Economic Pity Party Continues


Now that Mitt Romney has gracefully ended Act One of the drama in the Republican presidential primary by suspending his campaign, and since the only real drama in the Democratic presidential race is whether it will be the first female nominee or the first African-American nominee, some of the media elites have already returned to their next favorite theme of “A Recession is Coming.”


My January 21, 2008 column describing this media frenzy as a rerun of the movie, “The Economy”, was short-sighted, because the mainstream media editors and writers are putting out enough material for a long-running TV series. Some of the latest episodes:


“Economic outlook turns bleaker. U.S. Employers cut jobs for first time in 4 years. (Jeannine Aversa, AP 2-02-08). Conditions are deteriorating, according to the latest employment snapshot by the Labor Department, which showed nervous employers slicing payrolls by 17,000. The country hadn’t seen such a nationwide job loss since 2003.”


It is not revealed in the article until the very end that state and local government accounted for a loss of 18,000 jobs, while the private sector actually added 1,000 jobs. Lesson learned, keep reading. Additionally, the job numbers will be revised as more data are collected, and for the last four years they have always been revised favorably. But there is no drama in favorable revisions to employment reports.


“Recession fears grip market. Alarming data from service sector send Dow industrials down 370 points”, (Madlen Read, AP 2-06-08).


That alarming 370 points was 13 percent lower than the all-time high last October of 14,164 points, but still nearly 5 percent higher than the 52-week low of 11,634. Observation: It’s called normal volatility.


“Consumer Confidence Sinks Even Lower amid heightened fears about shrinking job opportunities and the possibility the country is falling into a recession.” (Jeannine Aversa, AP 2-08-08).


Surprise, surprise, surprise! This continuing recession theme is having its desired effect of putting Paul and Pamela Pitiful into an economic bad mood.


Thankfully, I found one article that presented the facts minus the hyperbole. Economist Brian Wesbury concluded:


“The Economy is Fine (Really). Rampant pessimism with so little evidence of serious trouble.”  (Wall Street Journal, 1-28-08.)


Brian Wesbury is chief economist at First Trust Advisors, a Chicago-based investment bank. He is not a media reporter, and his conclusion does not fit the story line for “A Recession is Coming”. Thus, you will not find his articles on the front pages of the business sections of most newspapers. 


It is worth repeating. We are in an economic correction of our national economy, not a recession. Negative economic hyperbole causes employers and investors to become hesitant, which could unnecessarily stimulate a further slowdown in the economy.


Some local economies are experiencing negative growth or none at all, but that cannot be blamed on short-term consequences of national economic policies. Similarly, some people are experiencing personal recessions with their finances, but the state of the national economy is the least of the mitigating reasons.


I will uncharacteristically make a prediction: Liberal members of the mainstream media and the Democratic presidential candidates will continue to fan the flames of economic doom and gloom all the way to the November elections. Why? Because it’s the next best surrogate for Bush bashing, since undeniable progress in Iraq does not offer much media drama.


If Hillary Clinton or Barack Obama win the White House, then the new storyline will be how long (four years of course) it will take them to clean up the economic mess created by President Bush.


If John McCain wins, the series will continue until they talk the public into a recession. The economic pity party . . . to be continued


Herman Cain is a radio talk show host on WSB 750 AM in Atlanta, airing weeknights from 7-10 p.m. He is also a syndicated columnist with North Star Writers Group.


© 2008 North Star Writers Group. May not be republished without permission.


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