*****Update at end of post includes detailed response to unhappy e-mail messages concerning this subject.
As someone that has done a lot of economic writing and financial media analysis, I'm used to gloom and doom from journalists.
However, Saturday's Associated Press article concerning the credit crunch and how it's impacting the mortgage market could be the worst example of economic and financial misreporting and exaggeration I've seen since the press universally forecast an economic downturn after Hurricane Katrina hit New Orleans.
Entitled "Have We Seen the Worst of the Mortgage Crisis," Joe Bel Bruno's piece actually suggested that a depression could be looming, and that housing prices in some areas could decline by 40 percent (emphasis added):
Storm gave her best shot at making an emotional plea for Hannah Montana concert tickets because the $200 price tag is just too high, although Storm has had a lengthy career in major network TV journalism, dating back to 1989 when she anchored "CNN Sports Tonight."
"[O]ne of the last parts of our travel survival guide, our Thanksgiving survival guide, of course, is the rising cost of the Thanksgiving dinner," "GMA" host Diane Sawyer said on the November 20 "GMA.". "As we said, the average price of a Thanksgiving dinner is up 11 percent from last year. So are there some ways to stretch the dollars and have no one know."
Also included in the segment was a story meant to tug at your heartstrings - a grandmother being forced to cut corners to make enough for her family's Thanksgiving feast.
After Wal-Mart (NYSE:WMT) reported higher third-quarter earnings and predictions of a "strong" holiday shopping season, the Dow Jones Industrial Average (DJIA) surged 320 points after taking a battering over the previous week.
In an Andy Rooneyesque rant about how his latest movie-going experience "left much to be desired," CBS White House correspondent Mark Knoller hinted he wouldn't mind seeing liberal consumers groups tackle hefty snack prices at the nation's movie theaters. He even suggested the short titles for two bills Congress could draft on that front.
From Knoller's November 12 Couric & Co. blog post (emphasis mine):
The fact is, most movie theaters are glorified snack bars. On average, they keep only 50% or less of the ticket price, far less for blockbusters in their opening weeks. Much of a theater’s profit comes from the concession stand.
Regal, one of the nation’s largest multiplex chains, reported the 3rd quarter profit margin at its snack bars exceeded 86%.
And the markup – especially on popcorn – is eye-popping. The Los Angeles Times last year calculated that just $30 of raw popcorn can translate into as much as $3,000 in sales at the snack bar.
That sounds like a markup that would make the oil industry blush.
It's hard to overstate the importance of the study released today by the Treasury Department ("Income Mobility in the U.S. from 1996 to 2005"; press release; full study PDF).
That's because it provides documented evidence of more, not less, economic mobility than in previous eras. Beyond that, taken in combination with an independent report I covered last week, it demonstrates beyond any reasonable doubt that the first four-plus years of the Bush economy were exceptional.
Tuesday's read-the-whole-thing feature editorial at OpinionJournal.com provides a great overview (bolds are mine), plus some tantalizing details:
With all due respect to the chairman (Fed Chairman Ben Bernanke), he would see the recession that so many others are feeling if he would only open his eyes. While Mr. Bernanke and others are waiting for the official diagnosis (a decline in the gross domestic product for two successive quarters), the disease is spreading and has been spreading for some time.
As NewsBusters reported, ABC's John Stossel bravely presented a skeptical view of manmade global warming on the October 19 installment of "20/20."
As a follow-up, Stossel published an op-ed at Townhall Tuesday that should be must-reading for alarmist media members and policy makers around the country.
Marvelously titled "Don't Look to Government to Cool Down the Planet," the article summarized much of what Stossel presented weeks prior on "20/20," while challenging the closed-minded to allow for greater scientific discussion and debate before hasty and capricious policy decisions are enacted that will harm the economy as they do nothing to solve the so-called problem (emphasis added throughout):
“It’s almost embarrassing. I talk a lot to political scientists, and you go through the numbers and the polls. And it all boils down – almost everything else goes away, except for five words: ‘Southern whites started voting Republican.’ The backlash against the civil rights movement explains almost everything that’s happened in this country for the past 45 years,” Krugman said in an interview promoting his book on the left-wing Democracy Now! newscast on October 17 .
I have to figure, after looking at the results of this Google News search on "real earnings" (in quotes), that Old Media business reporters found what came out in the Bureau of Labor Statistics' Real Earnings Report too difficult to understand. The search shows that only the Providence Journal among Old Media outlets mentioned the report, which was released Wednesday.
So in the interest of education, I'll break down the BLS report into simpler terms:
As NewsBusters reported Wednesday, wheat prices soared last week to their highest levels in history.
As many consumer products are made from this grain, and media love to carp and whine about inflation, one would have expected great focus to be given to this issue.
However, as some of the upward pressure on wheat prices is directly attributable to biofuels, a global warming obsessed media seemed concerned to address this inflationary issue for fear that it would bring negative attention on soon-to-be-to-Dr. Al Gore's beloved ethanol.
Bucking the wheat boycott trend was the Washington Post which published a very balanced article on this subject Saturday (emphasis added throughout):
Most Americans understand that unemployment declining is a good thing.
Yet, the folks at the Associated Press seem confused about this economic statistic as evidenced by an article published Saturday entitled "Help Wanted Ads Go Unanswered in West."
In fact, contrary to a media fixated on bashing corporations and business owners as greedy little devils, Matt Gouras' piece actually elicited sympathy for folks normally in the press' crosshairs while oddly downplaying the benefits tight labor markets typically bring employees (emphasis added throughout, h/t to an NB reader in Hawaii):
“But fundamentally it comes down to where you’re having the toys made. They’re being made in China, you don’t have oversight, there’s tremendous pressure for them to cut corners and keep costs down, because that’s how you make money. So allow me to ask you sir, how much money are you saving having these toys made in China?”
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.
Okay, we’ve all heard that hybrid vehicles are better for the environment. But how do they measure up when it comes to the green in your wallet?
Even starlet Paris Hilton has boarded the hybrid bandwagon, as reported by BPM Magazine.
“I came in a hybrid car because I think that’s the way to go – to save energy and to save our earth from all this – you know pollution so I think if everyone just takes the steps to do it will make a difference,” said Hilton.
However, Hilton probably wouldn’t be as concerned about the cost of owning one of these hybrids as average people. But you wouldn’t be aware of any higher costs after reading Chris Woodyard’s August 8 USA Today story.
“It’s not just good public relations,” wrote Woodyard. “Since the Supreme Court ruled earlier this year that the EPA can regulate greenhouse gases, General Motors, Ford Motor and Chrysler have joined the U.S. Climate Action Partnership, a coalition of corporate executives calling for CO2 restrictions.”
It would be even better public relations if hybrids made economic sense, but they don’t. It turns out hybrids cost more to maintain than regular cars.
Our TV network media personalities really want you to believe they can relate to the average American. After all, when you’re a high-minded soldier fighting on the side of the proletariat, it’s important to be a victim of the economic injustices you bring to light, right?
Not so fast. It turns out some of the most prominent journalists are doing quite well, according to the July 26 TV Guide. Early this year, a Business & Media Institute report exposed the “income inequality” talking points of the news media. Some journalists continue to attack the wealthy and complain about the downtrodden “middle-class” despite their own $3, $8 and $15 million salaries.
“NBC Nightly News” anchor Brian Williams has been highly critical of CEO compensation, referencing “stratospheric sums some CEOs make” and complaining about “golden parachute[s].”
You'd think it was the news media that "got a raise" last week for all the cheering. The federal minimum wage was increased on July 24 by 70 cents to $5.85 an hour and will go up by the same amount in 2008 and 2009.
CNN's Ali Velshi gleefully greeted the change on "American Morning" July 24. He called it "unmitigated good news."
ABC's Claire Shipman also called it "good news for thousands of low-paid workers," on "Good Morning America" the same day.
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).
Nets Barely Notice Surge in GDP as They Focus on Dow Plunge
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.
Not even reporting what second quarter GDP growth actually was (repeat: 3.4%) is flat-out negligence.
Last week's economic report couldn't have been much rosier. The economy grew at a faster-than-expected rate, faster than any time in over a year. But far from sparking runaway prices, inflation actually moderated.
But that didn't stop the Axis of Gloom, AKA the New York Times and its Beantown subsidiary the Boston Globe from publishing op-ed items this morning finding the cloud on the silver lining. A lugubrious Times editorial laments:
By the end of last week, any lingering hope that the housing downturn would be contained had vanished. As this week begins, signs of contagion seem to be everywhere . . . The fallout of housing-related turmoil is also likely to extend beyond financial markets.
The editorial ends with a call for closer monitoring of hedge funds.
Over at the Globe, liberal economist Robert Kuttner [pictured here] emits a sky-is-falling column "The crash that could come."
Do you ever wonder how "a single mother of two from Atlanta" who earns the minimum wage has the dough to plunk down for travel to Washington, D.C., lodging, and child care to attend a left-wing rally? I sure do. But then, it can't be that difficult when you're a professional victim for a left-wing group.
Washington Post reporter Xinyun Yang quoted one Irene Cole of Atlanta, Ga., at the close of his July 25 article "Democrats Cheer Wage Hike." "From $5.15 to $5.85 -- that's... a big raise, and we do thank you," Yang quoted Cole, who attended yesterday's "rally of union and activist groups on Capitol Hill."
Haven't I heard Cole's name before? Oh yeah, I have. It cropped up in January when I wrote about ABC's biased treatment of the minimum wage for the MRC's Business & Media Institute. Reporter Dean Reynolds cited Cole in his report on the January 10 "World News."
After reviewing that story, I realized two things. First, Cole misled the Post's Yang. She earns at least $6-an-hour (when she's working for private employers), and secondly, Cole is no stranger to whipping up crowds at liberal activist rallies (no word how much she's paid or compensated for expenses for her activist work):
"[T]here is unmitigated good news," proclaimed Ali Velshi about the minimum wage increase on the July 24 "American Morning." While the business reporter admitted "there are lots of sides to the story," he still called it "good news."
Back on January 2, Velshi stated that the current minimum wage of $5.15 an hour is "simply not fair." He had trouble with math in that "American Morning" appearance stating that the minimum wage comes out to $900 a week, when he likely meant $900 a month.
This time, Velshi was right with the math and left with his politics.
"The bottom line is you can't underpay people. And we've been underpaying people," said Velshi.
On the July 24 edition of "The Early Show," co-host Harry Smith interviewed home and garden expert Danny Lipford on how to keep gardens irrigated under parched conditions. Lipford demonstrated a lawn belt that can soak the grass beneath the surface. Such a product will "only cost you about $140.
Harry Smith, who's income is safe to assume to be much higher than the average American, gleefully responded, "now that the minimum wage is up, maybe we can afford it." Smith was clearly responding to the new increase in the minimum wage, effective today, of $5.85 per hour.
As CBS and NBC evening newscasts ignored dropping gas prices on July 23, ABC's Charles Gibson found a way to provide negative spin.
"News today in this country, that gas guzzling is getting cheaper while coffee guzzling gets more expensive. The price of gas took a dive in the past week. The government says it was down nine cents a gallon, to an average of $2.96," Gibson said on "World News with Charles Gibson."
But the cost of an optional Starbucks latte has nothing to do with gasoline. Still, Gibson oddly correlated the nine-cent price drop per gallon of gas since last week with the nine-cent price increase at the popular coffee joint.
In 1992, Bill Clinton successfully used a campaign strategy of continually focusing attention on the supposedly poor economy thinking that Americans typically vote with their wallets.
Of course, most intelligent people know that the recession actually ended in early 1991, and that this strategy would have failed miserably had the media not been complicit, and, instead, honestly reported economic realities.
Regardless, it appears media at this point are concerned that a strong economy and rising stock market might undermine Democrat presidential candidates in November 2008.
With that in mind, the New York Times' Tom Redburn wrote an article Saturday that diminished the importance of the economy in the upcoming elections, threw cold water on the premise that presidents have any impact on economic developments, and told readers to be much more concerned with - wait for it - the war in Iraq.
In fact, the article actually began (h/t Lynn Davidson, emphasis added throughout):
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):
“Private” must be the new cuss word, because “CBS Evening News” sure made it sound dirty on July 16.
“It was the winter of 2003, when Congress, in the dead of night, overhauled Medicare … [Medicare Advantage] and it put a large part of a government-run program into the hands of private insurance companies,” said investigative correspondent Armen Keteyian.
When Matt Lauer introduced a segment on the booming stock market by asking "is the rising tide lifting all boats?" I braced myself for another MSM excursion into class warfare. But surprise, surprise . . .
CNBC's Erin Burnett narrated the segment, and her opening also made me figure we were in for more bash-the-rich rhetoric. "Another day, another record on Wall Street . . . As stocks rise, it is time to finally ask, who is really making all the money? Who are the winners of the global economic boom?"
Cut to clips of the Dem presidential contenders, including Hillary offering up this bit of class warfare at its pandering worst: "while productivity and corporate profits are up, the fruits of that success just hasn't [sic] reached many of our families. It's like trickle-down economics but without the trickle."
But then came the surprising shift of gears.
CNBC'S ERIN BURNETT: But while the rich are getting richer, you may be too. Here's why: more than half of Americans are invested in the market, whether through a 401(k) plan or buying stocks or mutual funds, and many of those investments are surging. The Dow Jones Industrial Average is up 12% so far this year, and if your retirement plan invested in oil, that alone is up 21%. It's also worth noting that while politicians talk about "two Americas" [get ready to duck, John Edwards] virtually all Americans are seeing wages rise, and unemployment is at an historic low.
The segment, called "Hidden Charges," did not include comment from the banking industry and it also ignored the risk taken by banks by offering overdraft protection service – which can be a benefit to consumers. Bouncing a check is costly too from what I've heard.