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March 3, 2008

Get a Grip, Media: Recession Obsession is Dangerous


When the media do not have a sensational story, they sensationalize what they have. This is not only poor journalism, it is dangerous to the collective attitude of the public, because a negative attitude can too easily become a self-fulfilling prophesy.


The media’s factually unsubstantiated claims of an impending recession have been going on for over a year. Now, some of the “media elites” have gone one step further and made comparisons of current economic conditions to the Great Depression (Nathan Burchfiel, Business and Media Institute, 2-27-08).


A typical example is Charles Gibson of ABC’s World News Tonight when he reported on January 24, 2008 that the median price of a home in 2007 dropped 2 percent. His editorial comment was that “It’s the first time prices have gone down over a whole year since the Great Depression.”


The Great Depression was the time period from 1929 to 1940. So it was 68 years ago that the median price of a home decreased year over year. During those 68 years, we have been in a World War and several other wars, and we are in a war against Islamic fascism today. We had a real recession in the 1970s and a short one to start the 21st Century.


That single data point of 2 percent for 2007 compared with 2006 should have us shaking in our economic boots. Paul and Pamela Pitiful need to start stocking up on canned goods, putting some cash money under their mattress in small bills and quietly liquidating their stock market holdings, because food shortages, massive unemployment, bank failures and a stock market crash are just around the corner in the news media’s lens.


Wake up, people! During the Great Depression, our economy experienced a 25 percent unemployment rate (it hovers around 5 percent today), an 85 percent decline in the Dow Jones Industrial Average (it hit an all time high in 2007 and each year has finished higher than the previous year for the last six years), and GDP declined nearly 30 percent at its lowest point (we’ve had positive GDP growth for the last six years and the 2008 outlook by the Federal Reserve is positive growth between 1 to 2 percent.)


Since most people can’t spell GDP, it should not be a surprise that the Consumer Confidence Index (The Conference Board) has shown a declining trend for the last 12 months. The headline last week was that the index fell sharply in February following the January 2008 decline.


Metaphorically, when you constantly tell someone that the baby is ugly, pretty soon they can’t get that thought out of their mind. And when the Conference Board calls for their monthly survey of how you feel about the baby, you just might be tempted to say that the baby is ugly.


There are no ugly babies, just insensitive people who hurt people’s feelings.


Many news journalists hurt people’s outlook about the economy with inappropriate comparisons and sensationalism.


Consumers’ negative outlook makes them vulnerable to political pandering and empty political promises. This same negative outlook causes businesses to be hesitant about expanding their businesses for fear of being trapped in an economic nose dive that gets out of hand.


There is no doubt that we are in an economic correction, which is being caused in part by self-inflicted economic turbulence coming from home mortgage issues, a slowdown in real estate and construction, excessive federal spending and consistent promises by Democratic presidential candidates and the Democratic leaders in Congress to raise taxes.


Rather than focusing on irrelevant comparisons to the Great Depression, let’s learn the lessons of what not to do in order to avoid another recession. Namely, let the Federal Reserve do its job of controlling inflation, hope that Congress does not pass any new trade barriers, stop the increase in federal spending, and pray that the Democrats in Congress will not raise taxes.


Now that would be sensational news.  


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


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