Christmas is still nearly seven weeks away, and already the media are offering a “Bah, Humbug” for retail sales and the U.S. economy.
CNN shoveled coal at the positive economic news on November 2 and immediately moved into full Grinch mode.
“You know, just earlier this week the broadest measure of the economy, Kyra, the GDP, came in at 3.9 percent, stronger than expected. What’s working against it, though, the financials, concerns that we’re going to have a lot more carnage coming from that very important sector, consumer spending …” said “Newsroom” correspondent Susan Lisovicz.
On September 24 of this year, Alexis Christoforous of “CBS Morning News” warned, “It could be a blue Christmas for many of the nation’s retailers.”
Cramer, host of the CNBC’s “Mad Money” called liberal Democratic New York State Attorney General Andrew Cuomo as “communist” on CNBC’s November 7 “Street Signs.”
“[W]itness the fact that right now, the most important man in America for the stock market – the most important man and I mean it negatively is this guy Andrew Cuomo, the New York State Attorney General,” Cramer said. “I’m getting tired of the New York State Attorney General being the most important man in America.”
Talk about talking down the economy! No fewer than three times today, Matt Lauer invited Barack Obama to declare that the U.S. economy is headed into recession. At the end of a "Today" interview that focused largely on Hillary-related issues and Iran, Lauer turned to the economy and pressed Obama to predict the worst.
Over the last year, Angelo Mozilo, CEO of Countrywide (NYSE:CFC), decided to periodically sell some of the stock he owns in the company he co-founded 40 years ago and what is now the nation's largest mortgage lender – part of a prearranged measure known as a 10b5-1 trading plan. This was all done to prepare him for his December 2009 retirement date.
Despite his upcoming retirement, that drew the ire of some liberal pro-union groups and CBS’s Anthony Mason, whereas anyone defending his decision to sell his stock was not found in Mason’s report.
This week marks the unhappy milestone of Black Monday for Wall Street, which had some journalists warning “it could” happen again. Even if it doesn’t, the media hammered home the prospect of a possible recession.
The Dow Jones Industrial Average nosedived Oct. 19, 1987, when panicked selling cost investors 22.6 percent in one day of panicked selling. But do investors in 2007 need to be worried about another crash?
ABC anchor Charles Gibson twice pushed reluctant guest expert Sam Stovall, chief investment strategist at Standard & Poor's, to agree that high oil prices and the housing “crisis” will soon lead to a recession. On Tuesday's World News, Gibson outlined: “So, the housing crisis, the Treasury Secretary says it's a significant risk to the economy, the Fed Chairman says it's a significant drag on the economy, we have oil prices over $80 a barrel. Sam, isn't that a classic formula for a recession?” Stovall replied that “what I think is encouraging investors is the pro-activeness of the Fed and government officials by making sure that they get ahead of the curve and fend off the recession.” But Gibson was undeterred from his pessimistic assumptions and pressed again about whether the economy is “really broad-based enough to endure this kind of oil price hike and this kind of housing crisis and not have a recession?” Stovall maintained that oil and housing have impacted the economy, yet “our feeling is we'll probably...get away unscathed.”
It has been regularly reported by NewsBusters that media are doing everything in their power to withhold from the public the financial ramifications of global warming alarmism.
Be it the marketing of totally useless carbon offsets, or proposals for additional taxes on consumers and corporations, press outlets have been seemingly coordinated in their silence regarding such matters.
Another fine example of such a boycott occurred last week when House Energy and Commerce Committee chair John Dingell (D-MI) discussed a rather elaborate tax plan with the Associated Press Wednesday that virtually no major media outlet outside of Detroit bothered to report (emphasis added throughout):
You read that right (or left), Baker says the heck with the 5th Amendment protection against being "deprived of life, liberty, or property, without due process of law." If someone borrowed too much or won't pay the mortgage, that's OK with Baker, the co-director of the left-wing economic think tank the Center for Economic and Policy Research.
The culprit is, of course, global warming. Dingell heads the House Energy and Commerce Committee and has been looking for ways to appease the Gore wing of the party without hurting the auto manufacturers Dingell represents. "In order to address the issue of climate change, we must address the issue of consumption," he said in the article.
The Los Angeles Times reported a run of Countrywide Bank by its customers as more and more are panicked about the potential of the nation’s largest home lender to go bankruptcy – something fueled by many of the reports in the media.
“[S]ales of existing homes fell in 41 states from April through June,” said CBS correspondent Susan McGinnis on the August 16 “The Early Show.” “Meanwhile, foreclosures continue to soar. And there are growing worries about the nation's biggest mortgage lender; Countrywide Financial could be forced into bankruptcy.”
But some experts seem to think this scare from the media over Countrywide’s bankruptcy is a little premature.
In a recent blog post by CBS Evening News correspondent Cynthia Bowers we find that she has had some problems with the housing market herself. Bowers apparently didn’t grasp the fact that her Adjustable Rate Mortgage (ARM) can actually adjust:
“For a while we were okay. Then that Fed rate started going up, and so did our ARM. Over a five-month period it increased the cost of our monthly mortgage by nearly 40%!” Bowers wrote.
But Bowers shouldn’t have been surprised about her rate adjustment. According to Nexis, Cynthia Bowers has been reporting on the mortgage and housing market since at least 1997. With a decade of industry reporting under her belt, you’d think she’d be able to anticipate the fact that rates shift and payments adjust.
CNBC’s Jim Cramer went on an impassioned rant August 6 calling for the Fed to reduce interest rates.
“Bernanke needs to open the discount window. That is how bad things are out there … in the fixed income markets we have Armageddon,” said Cramer on “Stop Trading!” Following Cramers’ rant, NBC brought him on “Today” to analyze the economy August 10.
NBC’s Meredith Vieira asked “Are the markets about to crash?” on the August 10 “Today” show.
“Crashing” stock market? “Legalized gambling”? ABC’s “Good Morning America” berated the stock market for trampling on a supposed individual right to a mortgage.
Chris Cuomo’s August 13 story on a couple who had their mortgage pulled due the recent “drama on Wall Street” started like this:
“To a certain extent the stock market has always been a form of legalized gambling, where Wall Street tries to cash in on bets made on the right companies. But for many financial institutions, the chips were the mortgages of hard-working American families, in danger of losing their homes, or now never getting a chance to live the American dream.”
At OpinionJournal.com on Thursday ("Fair but Unbalanced -- How the media promote false pessimism about the economy"), Brian Wesbury, who has written several times on the disconnect between the strong economy and the public's perception of it (previous references here, here, here, here, and here), had another generally stellar column about what is nonetheless a relatively small piece of the problem.
Wesbury ascribes much of the disconnect to TV's need for "balance," when giving positive and negative views equal weight is often in reality unbalanced:
If one guest or expert is a "bull," then the other must be a "bear," to keep things fair. Or, if there is a single guest on air, the host often takes the other side of the issue in order to keep things balanced. Get some sparks between guests, a little argument here or there, and it's even better for the ratings. The bigger the audience, the better the show, that's the way the advertisers see it. It's basic supply and demand.
But this idea of presenting both sides of an issue, while entertaining, informative and seemingly balanced, may paradoxically create a warped perspective of the economy.
Inflation? Forget about it. Let the economists and policy wonks worry about it.
The Federal Reserve’s decision not to drop interest rates drew the ire of “CBS Evening News” correspondent Kelly Wallace on August 7. Wallace’s story about the “credit crunch” centered on Amanda Michalko, a 26-year old Michigan resident, who would not benefit from lower monthly payments on her pending mortgage because of the Fed.
Diane Sawyer kicked "Good Morning America" off this morning with economic worries about Wall Street, the "credit crunch" and "record" foreclosures.
“We do begin with the week on Wall Street, where the Dow took another huge hit, plunging 280 points in just two hours. The cause of the worst credit crunch in almost quarter a century and you’ve seen it in the neighborhoods – a record number of foreclosures,” said Sawyer.
But according to the Mortgage Bankers Association (MBAA), foreclosures are not at a record when viewed by percentage. GMA’s one-sided talk of a “record number of foreclosures” misled viewers. Foreclosures are up compared to 2006, but so are the number of home loans.
Good thing “Nightly News” is focusing on global warming solutions or the network might even try to pin that on the housing market.
“Even Toyota sales fell and blamed a weak housing market for a plunge in light truck sales,” said “Nightly News” anchor Brian Williams on August 1. Williams also managed to mention that the DJIA finished up 150 points “despite the fact that the housing and mortgage market are showing even more signs of weakness now.”
Consumer confidence hit a six-year high in July, a widely watched gauge of sentiment showed on Tuesday, as Americans shrugged off falling home prices to focus on a healthy jobs market, instead.
The New York-based Conference Board said that its Consumer Confidence Index, rebounded to 112.6, its highest level since August 2001 when it recorded a 114.0 reading. That compared to a revised 105.3 in June. The July 24 cutoff for the preliminary survey of 5,000 U.S. households was before last week's stock market tumble, however.
It has to. A six-year high is bad enough; we surely can't afford to let the index get to an 8-year high, or someone might get the mistaken idea that the current economy is as good as or (heaven forbid) even better than the Golden Age of the 1990s (even though by a couple of respected measures it is).
The ABC, CBS and NBC evening newscasts on Friday all devoted full stories to the fall in the stock market, touted as “the worst two-day point drop for the Dow in five years,” but barely had time for a sentence about the 3.4 percent second quarter jump in the GDP, the biggest in over a year. In fact, neither ABC nor NBC cited the specific 3.4 percent rise in the Gross Domestic Product, the measure which the AP on Friday described as the “best barometer of the country's economic fitness.” Not one of the three evening newscasts mentioned how the Dow is still well above the 13,000 level it broke through in April and none noted fresh good news on inflation.
ABC was the most negative. “Stock slide,” World News anchor Charles Gibson teased, “Wall Street finishes the worst week of the year down nearly 600 points.” Gibson soon highlighted that news, as he only alluded to the good GDP number, when he reported “the worst week for the Dow in five years. Even positive news on economic growth wasn't enough to keep investors from selling. Among other things, they had to contend with a battered housing market.” Reporter Betsy Stark agreed as she too only made a passing reference to the GDP: “It sure is, Charlie. In fact, buried inside that positive report on Gross Domestic Product today was more evidence of what economists now describe as an outright recession in the housing sector.” ABC didn't even put the GDP number on screen as Stark devoted her entire story to the impact of the declining housing market before concluding that “it increases the odds of a downturn in the overall economy since housing now accounts for roughly one in ten American jobs.”
And that's exactly how the mainstream press treated it. What goes down, must go down further. Even with the sour coverage on NBC and CBS on July 26, there were voices of reason that warrant commitment to the markets.
"So this is not a crash, if anything, it's a correction," said CNN "American Morning" business correspondent Ali Velshi. "It might not even be a correction; it might just be a stop on the way."
Wow, good news, even on CNN.
Others experts point at signs our economy is still in tact and still moving in the right direction as evidence not to panic.
Yesterday, Brent Baker at NewsBusters caught the Old Media emphasis on the decline in existing-home unit sales, even though the median existing-home price went up. CBS and Katie Couric apparently invoked the Great Depression in their existing-home sales commentary (I think any number of those 90 and older could say: "I knew the Depression, and Katie, this is no Depression.").
The median price of a new home sold last month dropped to $237,900, down by 2.2 percent from a year ago. It was the biggest year-over-year price drop since a 6.5 percent fall in April. The median price is the point where half the homes sold for more and half for less.
But at the risk of sounding like a broken record, I'm forced to make the same point I made a couple of months ago in more detail -- by the time you consider changes in the regional mix in home sales, you're left with an overall new-home market where regional prices are holding steady or perhaps even slightly increasing -- and definitely NOT in decline.
A quick look at the following figures will illustrate the point:
On a day when the National Association of Realtors (NAR) reported a rise in the price of homes so the average median price is above where it was a year ago, Wednesday's CBS Evening News featured a soundbite claiming “home price depreciation” unprecedented since the Great Depression. Apparently, reality wasn't negative enough for CBS, so they felt a need to add some embellishment.
“The housing market is going deeper in the dumper,” anchor Katie Couric rhymed, as “America's Realtors reported today that used homes were selling in June at the slowest pace in four and a half years.” She acknowledged “a bright note for homeowners,” but added a caveat in relaying that “house prices went up for the first time in nearly a year, but just barely.” The headline for the NAR press release from which CBS cribbed gave equal weight to two developments -- “Prices Rise, Existing-Home Sales Decline” -- but Anthony Mason's story explored only the negative, as he focused on rising foreclosures and declining sales, and even managed to spin the climbing home prices into a dire situation. “In a Wall Street conference call, Countrywide's CEO, Angelo Mozilo, had this warning,” Mason stressed. Then, with matching text on screen, viewers heard audio of Mozilo from a day before NAR's numbers were released on the higher median home price: “We are experiencing home price depreciation almost like never before, with the exception of the Great Depression.”
As NewsBusters has been reporting this week (see this and this), as the stock market hit new all-time highs, the media have been dour Nervous Nellies carping and whining about gas prices, the low value of the dollar, the housing slump, and the rising trade deficit.
Yet, there are a variety of issues that press outlets have conveniently ignored during this record bull run that not only explain rising stock prices, but also give a more accurate view of what is going on in the global economy.
For instance, Bloomberg was one of the only major media outlets Tuesday which reported record purchases of U.S. securities by foreigners in May (emphasis added):
“In stock market terms alone, this is now the longest consecutive uninterrupted stock market rally,” said Lawrence Kudlow on MSNBC’s “Morning Joe” on July 13.
“It started in early 2003, so that’s four and a half years. And it’s incredible how much wealth is being created out there and it’s unfortunate, really – almost tragic – that the president just doesn’t get any credit for it at all because he’s got a lot to say on the economy.”
While Kudlow found the record worth cheering, the three major networks supplied "some worries" and "some dark clouds" to viewers on July 12. Each one offered its own spin of gloomy news following the record high closings of the Dow and S&P 500.
"There are still some dark clouds looming over this market," said correspondent Dan Harris on ABC’s "World News with Charles Gibson." "The housing market is in a slump, interest rates are rising and gas prices are ticking back up."
You'd think successfully preserving the bald eagle and helping its population increase would garner a positive news report. You'd be wrong.
NBC "Nightly News" found reason to worry that the bald eagle, which is now flourishing, will be wiped out now that it has been removed from the endangered species list.
“[Nationwide resurgence of the eagle] is not the end of the story. Now the question is will man maintain the eagle’s habitat or will the eagles adapt to man,” said chief environmental affairs correspondent Anne Thompson on June 28.
“American Morning” provided another forecast of mostly cloudy skies for the housing market on June 26.
“I got to tell you John [Roberts, “American Morning” co-host], this is not good news for people who are out there trying to sell their house and this of course is supposed to be the biggest time of year for sales,” said Gerri Willis to begin her report.
Willis, the personal finance correspondent for CNN and host of “Open House” was reporting new data from the National Association of Realtors that showed lower median home prices and slipping sales.
While the NAR data was downbeat, Willis called it too “upbeat” and “optimistic.” She then labeled a doomsayer with a more negative prediction “respected."
Update: SEE Editor's Note at bottom of post for related MRC content.
1Q07 Home Prices Up 0.5%, 4.3% Over 12 Months Ago
Those looking for a pervasive and severe nationwide decline in home prices are going to have to keep looking.
The Office of Federal Housing Enterprise Oversight (OFHEO) just released its House Price Index (PDF) for the first quarter of 2007. This most comprehensive of home-price reports shows that nationwide prices increased 0.45% (rounded to 0.5% in the announcement) in the first quarter of this year, and went up 4.25% (rounded to 4.3% in the announcement) in the past four quarters.
Core inflation during those two time periods was 0.6% and 2.5%, respectively. OFHEO says that inflation excluding only shelter costs only rose 1.6% during the past year.
Context (from Pages 4 and 5 of the report):
From 1990 through 1997, reported four-quarter appreciation was less than the 4.25% just reported 28 out of 32 times.
During that same time period, individual-quarter appreciation was less than the 0.45% just reported 14 out of 32 times -- including six nationwide quarterly declines.
I recall no discussions of pervasive real estate "bubbles" or fears of steep, widespread declines during the 1990s.
That's right. Bubble, shmubble, despite this picture from Matt Drudge, who got snookered on this one:
Fire sales, schmire sales.
The Chief Snookerer in the latest search for the elusive housing bubble is Martin Crutsinger of the Associated Press, with a significant assist from the Commerce Department (link is to a PDF), which inexplicably did not, and apparently does not, report the regional sales data needed for a more detailed look.
Crutsinger took Commerce's housing report showing a significant decline in the nationwide median selling price of a new home, both in the past month and year over year, and ran with it at an all-out sprint (bold is mine):