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CNN’s Dobbs Gives Hot
Economy a Cold Shower
Business anchor’s appearance on CBS
fraught with pessimistic myths.
By Ken Shepherd
Free Market Project
Dec. 06, 2005
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Brought on to issue “an economic reality check,” CNN’s
resident pessimist Lou Dobbs poured cold water on the U.S.
economy’s strong 4.3 percent economic growth in his December
6 interview with Hannah Storm of CBS’s “The Early Show.”
Dobbs’s negative assessments, unchallenged by Storm,
presented an unrealistic and gloomy picture of an American
economy brimming with good numbers. |
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 Â Â Â Â Storm began her interview by noting
215,000 new jobs were added to the economy in November and asked
Dobbs, “Is the economy strong? What’s the bottom line?”
    The
CNN business anchor conceded the economy was strong, but still said
it was plagued with “serious weaknesses,” among them an investor
confidence index, which he noted had just rebounded from a two-year
low. Focusing on that detail, he ignored the stock market’s strong
numbers.
    Dobbs also skipped over the Conference Board’s Consumer
Confidence Index, even though Storm asked him about it. The Board
noted in its
press release accompanying the November data that American
consumers have a positive outlook not only on present conditions but
future economic growth and job opportunities.
   Â
Some other myths promoted by Dobbs:
- Recent layoffs at General Motors point to a domestic
manufacturing sector “which has frankly been decimated over
the past five years.”
    While Detroit’s “Big Three” automakers
are laying off workers in response to the weight of
labor and pension costs, foreign automakers like Toyota, Nissan,
and Hyundai, are steadily gaining market share, and creating jobs in
the United States. The December 6 Wall Street Journal reported
ongoing efforts by Toyota, Nissan, and Hyundai to open facilities in
the United States, particularly Michigan, and to hire recent college
graduates as engineers, while the December 6
Detroit News reported that Toyota is considering opening an
engine plant in Michigan. Meanwhile, about an hour after Dobbs
wrapped up his interview with Storm, the
Bureau of Labor Statistics released a third-quarter report
on productivity, which showed strong gains for manufacturing
productivity (3.4 percent) overall and a whopping 6.5 percent boost
in productivity for durable goods, including but not limited to
automobiles and heavy machinery.
- Dobbs scoffed at analysts who say inflation is low:
“economists love to throw out the core inflation – throw out the
energy and food prices and come up with something called the core
rate. In point of fact, all of us use energy and all of us are
eating.”
    In point of fact, the Harvard graduate
is insulting viewers by confusing the issue.
Core inflation is defined as a “measure of inflation that
excludes certain items which face volatile price movements,” because
temporary price shocks “can diverge from the overall trend of
inflation and give a false measure of inflation.” The sharp
post-Hurricane Katrina spike in gas prices – which has since
steadily declined – is one such example.
- Dobbs cited a $700 billion trade deficit and a 4 trillion
“trade debt” as something that the United States must “come to
terms with.”
    The Cato Institute’s
Daniel Griswold writing in the February 25 Financial Times
documented how the trade deficit is an “accounting abstraction”
which doesn’t correlate to job creation and economic growth. Asked
Griswold, “If a rising trade deficit is responsible for ‘shipping
jobs overseas,’ how do the critics of trade explain the fact that
unemployment rises when the trade deficit shrinks and falls when it
expands?”
    The Free Market Project recently
published a comprehensive look at the Emmy-winning business
anchor’s history of biased economic coverage.
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