Reality Deflates Another Media Bubble

Just in time for Thanksgiving, my colleague Julia Seymour has a few rainclouds to open up on the media's parade.

This time it's the media's overblown fear of inflation. Yep, it's time to put away the disco ball and the polyester.

All bets are off if Nancy Pelosi urges everyone to put on a sweater and crank down the thermostat, however.

Journalists worked themselves into a fright this spring as inflation rose, scaremongering with cries of “stagflation” and “recession.” But when the news came last week that the inflation “monster” wasn’t “rearing its ugly head,” the media could only whisper.

“I just tend to think that inflation is not something that has been kicked yet,” said CNN’s Allen Wastler on the August 19 “In the Money.” “It’s one of those monsters, you want to stay out in front of it. The moment it’s past you – boom, you’re dead.”

Back on May 23, when inflation was rising, NBC’s Anne Thompson imagined a stock market crash because of one report that said there were “similarities between today’s environment and the environment before the crash of 1987.”

But when October came, inflation suddenly didn’t look like such a horrific threat. And the networks gave it only slight mentions – unlike the many lengthy reports warning about economic collapse throughout the year.

Wholesale core inflation dropped a record amount in October, and consumer core inflation had the smallest increase in eight months. Core inflation is generally accepted as a measure of long-term inflation, because it strips out energy and food prices, which are the most volatile. The media, however, have focused instead on those volatile energy prices as their measure of the economy for much of 2006.