The 'Recession' Is a Media Myth

['myth' is a bit strong, but certainly premature and 'curiously' contrary to past reporting...]

During the 2000 election, with Bill Clinton as president, the economy was viewed through rose-colored glasses. According to polls, voters didn’t realize that the country was in a recession. Although the economy started shrinking in July 2000, most Americans through the entire year thought that the economy was fine.

But over the last half-year, the media and politicians have said we were in a recession even while the economy was still growing. Talk of recession is seemingly everywhere. While the majority of people rate their personal finances positively, consumer confidence in the economy has plunged to a 16-year low, well below what it was during the last year of the Clinton administration when we were actually in a recession.

A Nexis search on news stories during the three-month period from July 2000 through September 2000 using the keywords “economy recession US” produces 1,388. By contrast, the same search over just the last month finds 3,166. Over 78 percent more negative news stories discussed a recession when the economy under a Republican was expanding than occurred under a Democrat when the economy was shrinking. [more research data within >]

The hysteria created by this coverage can have a great cost. It creates pressure for government to “do something,” even if that rush to do something actually ends up hurting the economy. For example, Obama's promises last week “to amend our bankruptcy laws so families aren't forced to stick to the terms of a home loan” will only further drive down the value of mortgage-backed securities, making any unstable financial institutions that hold them even more likely to fail. Who is going to want to loan money when the contract can be rewritten at a later date?

The news media have generated a lot of fear. Ben Stein has a point when he says “The actual economic conditions are not that bad. I think if we have a recession, if we have a serious recession, a great deal will lie at the media’s feet.” Hopefully a little perspective will enter the picture before even more harm is done.

[recession is two consecutive quarters of economic (GDP) contraction. We've yet to have a single month of it - and while the metrics for this are trailing and we could be contracting now, we'd need six months of it before anyone honest could claim we're in a recession - yet the hysteria continues, increasing the likelihood of it happening all the while...]

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