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Free Market Project

2/18/2006 7:13:39 PM

Updated 01/25/06

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Networks Paint Bush Economy As Bleak No Matter What The Facts Really Say
Media’s bad news bears deliver negative news 62 percent of the time despite economic expansion.

By Amy Menefee
August 17, 2005

  • Economic news heavily negative: Coverage of economic news on the three broadcast networks was negative 62 percent of the time, despite ongoing good news of more jobs, low unemployment and economic growth.
  • Good news undermined: Even when good news made it to viewers, journalists undermined it with bad news 45 percent of the time.
  • Negative stories given more air time: Good news stories were relegated to briefs roughly two thirds of the time. Negative news received longer stories and outnumbered positive stories by almost 4-to-1 in that category.

     Which do you want first – the good news or the bad?

     The good news is that the economy is strong and growing. The bad news is the news about the economy.

     The federal deficit is shrinking, unemployment has fallen, and America has seen more than two straight years of job growth. But broadcasters have been describing the economy as “dicey,” “volatile” and “slow.” A Free Market Project analysis of economic stories on network evening news shows since President George W. Bush’s second inauguration showed negative news prevailing 62 percent of the time (71 out of 115 stories). That number was deceiving, however, because even good news often was portrayed as bad. In 40 stories classified as good economic news, journalists undermined the good news with bad 45 percent of the time.

     Good news was relegated to short reports, or briefs, 68 percent of the time, while bad news was treated with full stories. When briefs on both sides were excluded, the comparison of full-length news stories showed an overwhelming ratio: negative stories outnumbered positive ones almost 4-to-1.

     NBC’s “Nightly News” illustrated the reporting trend with a glaring disparity between its Aug. 15 stories. Anchor Brian Williams took about 25 seconds to tell the brief good news of the federal deficit reduction, which he admitted was due to “higher-than-expected revenues and a steadily growing economy.” Immediately, however, he led into another story warning of “financial hardship” for all, coming from rising gas prices – and that story went on for more than two and a half minutes. Reporter Martin Savidge asked, “How long ’til the economy as a whole feels it?”

     Journalists weren’t consistent from one report to the next. On the April 26 “CBS Evening News,” Bob Schieffer said, “Americans are getting a little concerned about where the economy is headed.” That was just before he reported that new homes were selling “at the fastest pace on record.”

     Amidst the confusion, network news has been devoting far more time to gloomy and often unfounded predictions than to real news that is positive. ABC’s Betsy Stark went so far as to predict a slowdown in the economy three days before a jobs report that delivered 270,000 new jobs, coming in far above projections.

     On the July 20 “CBS Evening News,” Trish Regan found a voice for the media’s economic deathwatch mentality. She went to the streets, where, as she put it, “reality trumps forecasts.” Her man in the street articulated the news shows’ recurring view of the economy: “It’s very tenuous. It could fall apart at any moment. One bad piece of news, one additional terrorist attack, one negative corporate earnings, and it goes right down again.”

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     Regan’s report was supposed to be about Federal Reserve Chairman Alan Greenspan’s comments on the economy. Greenspan had said the U.S. outlook was “one of sustained economic growth.” Regan acknowledged that Greenspan said “the economy is doing fine,” but she devoted her entire story to undermining his statement. She and anchor John Roberts worried together about “potential threats to this economic growth,” including job loss, energy costs and the housing “bubble.”

The study

     The Free Market Project looked at all NBC, CBS, and ABC evening news stories related to the word “economy” between Jan. 20 and Aug. 5, 2005. The study explored news items that the media explicitly tied to the health of the economy. The study’s 115 stories addressed topics like oil prices, the “housing bubble,” monthly unemployment reports, and other government reports on the state of the economy. Each of those topics gave rise to other similar stories, but this analysis focused solely on those the media directly linked to the economy.

     Stories were classified as negative news if the main thrust of the report was negative; for example, layoffs at a particular plant. Likewise, positive stories focused on news such as a strong job growth report. It was also noted if a story’s direction changed from positive to negative or vice versa, and stories were classified as briefs or full reports. Briefs were short one-person reports, typically delivered by news anchors.

News flash: when stocks drop, it could mean expansion

     Journalists failed to explain key economic concepts that could put the news in context. On March 22, as the Fed raised interest rates because of the expanding economy, ABC’s Betsy Stark couched the news with worry: “It might stamp out inflation as it does that, but it also might slow the economy down too much. So we’re looking ahead with, with a little bit of concern.”

     On NBC that same night, Anne Thompson said investors were “nervous” and that the Dow Jones industrial average had fallen “to its lowest levels since the end of January,” without explaining that the stocks’ downturn was normal for the situation.

What does a ‘growing’ economy look like?

     A growing economy is characterized by job creation, wage growth, steady growth in gross domestic product, and slowly increasing inflation. In response to a strong unemployment report or the news of inflation, the stock market will drop in the short term due to fears of inflation.

     Dr. Gary Wolfram, the George Munson professor of political economy at Hillsdale College, explained that the Federal Reserve Bank increases interest rates to stem the tide of inflation. Wolfram said if investors think the Fed is going to respond to an increase in jobs by restricting the supply of money, stocks are likely to fall. A rate increase causes a slight uptick in credit card rates, mortgage rates, and interest rates paid into savings accounts. Also, with more employed workers paying income taxes and sales taxes, government revenues are expected to rise.

     All of those things, to a varying extent, have occurred since the inauguration on January 20. Over the last six months, 1.8 million jobs have been created, pushing the unemployment rate down from 5.2 to 5.0 percent. GDP has grown an average of 3.2 percent over the last two financial quarters, and the federal deficit has narrowed from $412 billion to $331 billion.

So how’s the news?

     In spite of strong economic growth, reports since the inauguration have focused on negative events in the economy, such as individual companies’ layoffs. Natural free-market occurrences, such as consumers’ shift away from buying American cars and rising prices for housing and gas, have been portrayed as apocalyptic. Good news was relegated to brief status 68 percent of the time, while negative news was only briefed 28 percent of the time, a ratio of more than 2-to-1. That meant negative news was far more likely to be treated with full reports, including correspondents and interviews.

     Coverage was filled with economic errors and misstatements such as these highlights:

     Oops!: On May 3, ABC had two dreary economic reports. Charles Gibson introduced one about “the hit from higher gas prices” and “grim” auto sales figures. And Betsy Stark looked toward the coming jobs report with pessimism: “the next jobs report on Friday should tell us about how much the economy slowed down, Charlie.”

     Just three days later, her tone changed. When the jobs report came out May 6, it showed “unexpectedly strong” growth, Elizabeth Vargas said, and Stark added, “Today’s report was reassuring evidence that the nation’s job market and economy are on solid ground.”

    Turning good to bad: No matter how good the news, someone had to rain on the parade. A March 4 story on ABC’s “World News Tonight” was the perfect example. The story related strong new jobs growth. But at the end of the upbeat report, Dean Reynolds countered, “But, Peter, while job growth is up, wage growth is not. And the question now is how long consumers will keep spending and fueling the economy without a raise in pay.”

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     Looking at the February Employment Situation from the Bureau of Labor Statistics, Reynolds might have seen that wages had held steady in the previous month. But had he looked closer, he would have seen that over the year, hourly earnings had grown by 2.5 percent and weekly earnings by 2.2 percent. To say that wages weren’t growing was misleading to the audience.

     Overblown and incomplete: The June 5 “CBS Evening News” lamented auto factory closings, including an interview with analyst David Cole, who predicted “a financial crisis for the country that is way beyond what we saw during the S&L crisis a number of years ago.” Reporter Mika Brzezinski said consumer shifts away from American automakers were “forcing secure, high-paying jobs with full health and pension benefits to go the way of the Oldsmobile – into oblivion.”

     The story mentioned the United Auto Workers contract with General Motors but did not explore how the union’s demands contributed to the company’s rising health care and pension costs. It also failed to note that the American companies must be competitive to stay in business – profits are not guaranteed, though union pensions are expected to be.

     Buyer beware: Reporters sometimes acted like homebuyers should buy only from what journalists considered pure motives, such as needing shelter. On ABC’s May 19 broadcast, Betsy Stark cited a National Association of Realtors study to say that 23 percent of houses (hardly a majority) are bought by “investors, looking to make a quick profit. In the process, they’ve driven prices to record levels for those other home buyers, looking for a place to live.”

     America’s free market allows people to buy whatever they can afford for any reason or no reason at all. The free market fosters personal investment and the growth of wealth – and real estate is one way people invest. The media tended to look at the stock market as “volatile,” as Stark put it on April 21, but then they berated people for making what could be considered a stable investment in real estate. The consumer can’t win.

     Blaming the free market: On the May 13 “Evening News,” CBS reporter Bill Whittaker brought a report about the need for individual retirement savings. Despite the acknowledgement of personal responsibility that comes with such a topic, Whittaker overtly criticized the free market, even blaming it for economic woes: “Deregulation, globalization and intensified competition have made for a much more volatile economy.” He cast the need for personal responsibility in a negative light, warning viewers that their employers wouldn’t be there to bail them out.

     Memo to Congress: lower my costs!: When it came to gas prices, journalists repeatedly flogged President George W. Bush and the energy bill for not lowering consumers’ costs. John Seigenthaler opened an April 24 “NBC Nightly News” report: “President Bush is also facing growing pressure from an American consumer who wants him to do something about the high price of gasoline in this country.” Likewise, Betsy Stark on ABC’s “World News Tonight” April 21: “One thing about the House energy bill almost everyone agrees on, including the president, is that consumers looking for immediate relief from high energy prices are likely to be disappointed.”

     Reports like those worked from the assumption that the government could and should somehow intervene in pricing – a concept unseen in stories on prices of everything from movie tickets to automobiles. Journalists failed to explain how the market determines prices based on demand for gas and the available supply.

Research Analyst Charles Simpson contributed to this report.


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