Media Coverage and Recession Fears
by: Jim Bell, January 31, 2008 5:01:00 am
You can't turn on the radio or TV without hearing how bad the economy is, and how bad the home mortgage crisis is, with home foreclosures increasing by the day. It's an issue in the Presidential campaigns. Hardly an hour goes by without this politician or that economist saying the country is sliding into a recession and people should tighten their belts because it's coming. Question: does that kind of constant reporting of recessionary trends and fears make business people and consumers so nervous it becomes a self-fulfilling prophecy? One economist, Barton Smith of the University of Houston, says no it doesn't, and maybe yes it does. "No" because:
"I think the media tends to be a lagging indicator."
Smith says the media are behind the economic trends most of the time, not ahead of them, and are just reporting what they see going on. On the other hand, he says as recently as last summer, there was almost no reporting that the economy could be headed for a downturn, but when fears of a recession started emerging, the media grabbed onto the story and hasn't let go.
"When the media changes their mind, and all of a sudden there's a wake-up call in the nation as a whole, the media makes a really big to-do about it. I think what happens is that the media reinforces bad news to the point that you do have a tendency for an overkill."
That's the view of an economist. What does a business reporter think? Loren Steffy of the Houston Chronicle says economic indicators are what they are, and he and his colleagues just report them and try to determine what they mean. Steffy doesn't think reporting bad economic news does anything to encourage a recession, because most of the time he's just telling people what they already know.
"There are some numbers out there that spark the reporting, if you will, and I mean, in of themselves, these numbers don't necessarily mean that we are in a recession but it certainly makes people more concerned. But when you're talking about things like inflation, I mean that's something that people feel every time they go to the grocery store."
The bottom line, Steffy says, is that he doesn't think the media does anything to fan the fires and push the country toward a recession, but he does think the media should be careful with how they frame their stories about it.
"We don't know for sure that we're in a recession at this point. I mean, we won't know for a number of months if not almost a year, we're not going to be able to call that. So even though the numbers don't look great at this point and it certainly looks like we're headed that way, I think we have to be real careful about saying we are in a recession."
Jim Bell, Houston Public Radio News.