Brian Wesbury, whose writings I have quoted often, is at it again, puncturing the economic gloom with reality-based analysis. Since his job is to provide useful info for the investor-clients at First Trust, creating unrealized hype is not in his best interest.
"Now, to the economy," ABC "World News" anchor Charles Gibson said. "And a word not heard since the 1970s - stagflation. That occurs when prices go up just as the economy slows down - stagnation plus inflation. And the government that wholesale prices shot up 1 percent in January and are now up almost 7.5 percent in the past 12 months."
Recession stories have a lot in common with global warming stories - there are a lot of them and you hear only one side. And like global warming, recession is the subject of a Newsweek cover story, appearing on the front of the magazine's February 4 issue.
"The Great Global Market Freak-Out of 2008 has everyone asking whether the United States - already on the road to recession - is entering into a protracted period of economic trouble where jobs will be slashed, prices will continue to rise and the dollar will keep falling; and if so, whether the declining U.S. economy will pull the rest of the world down with it," Gross wrote. "A recession is defined as a widespread contraction in economic activity lasting more than a few months, and because of the lag in financial data, recessions typically aren't officially declared until long after they start. In short, the United States could already be in one."
"Business spending, concerns about business spending overall. I think Anne Mulcahy [CEO] at Xerox (NYSE:XRX) may have said something about business spending," Faber said. "I'm hearing business spending slowing. That's the concern - what happens to the stock market in a recession because we're heading into one it looks like."
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.
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.