During the middle years of last decade, the business press, including the Associated Press, worked the word "recession" into its reports on the economy quite regularly.
Yesterday, despite a current economy facing far worse fundamentals than were seen during 2007, the AP's Paul Wiseman and Bernard Condon gave us a nearly 882-word treatise on "WHY GLOBAL WOES AND SINKING STOCKS DON'T MEAN US RECESSION." In the process, they inadvertently admitted that the business press's recent obsession with blaming any and all weak U.S. economic news on the economies of the rest of the world has been wrong. Additionally, while quoting a prominent bank's full-year 2015 economic growth projection, they ignored the fact that this same bank projected that the fourth quarter of 2015 is on track to come in at a dismal annualized 0.1 percent.
In a September 2007 report, Amy Menefee at the Media Research Center noted that "Over the last four years, 'recession' has been mentioned in more than 100 stories since August 2003, when the Bush recovery started, delivering 47 months of positive job growth."
In August 2007, citing multiple AP reports, I noted that the wire service was consistently telling the country the following (links are in original):
- Home prices are falling nationwide, when they’re not.
- The economy is “limping along” and “plodding along at a tepid pace,” when it’s not.
- Wages and earnings are flat or “stagnant,” when they’re not.
- Income inequality is increasing, when it’s not.
All of this downbeat press reporting occured despite economic growth which had averaged a bit more than an annualized 3.0 percent during the previous 18 quarters (Q1-2003 through Q2-2007, based on revised figures at the government's Bureau of Economic Analysis).
To be clear, the U.S. economy went into an official recession as defined by the National Bureau of Economic Research in December 2007. NBER's too-convenient call ignored the fact that the economy actually grew during the fourth quarter of 2007 and the second quarter of 2008, and that most of their stated criteria for their announcement were not met until June of 2008 (not coincidentally, shortly after Barack Obama's nomination as the Democratic Party's 2008 presidential candidate became certain). The recession as normal people define it ("a decline in GDP for two or more consecutive quarters") began during the third quarter of 2008 and lasted until the second quarter of 2009. The 2008-2009 recession has been followed by the "worst economic recovery ever" since World War II.
Though a recession was probably inevitable because of the Democratic Party housing policy and Democratic Party crony-driven housing and mortgage-lending messes, it didn't have to be as deep as it was. Obama's nomination, his 2008 election victory, his actions during the presidential transition, and his decision to choose Keynesian "stimulus" and massive government interventions over supply-side economics and regulatory restraint caused the downturn to be far worse than it needed to be, and caused the "recovery" to be historically weak.
Now let's see how the AP's Wiseman and Condon dressed up a situation that is currently far worse — details of how much worse are in recent NewsBusters posts found here and here — than it was during the period covered in MRC's study. Note, for starters, that the headline betrays absolutely no uncertainty, while the content at least acknowledges the possibility (bolds are mine throughout):
WHY GLOBAL WOES AND SINKING STOCKS DON'T MEAN US RECESSION
Last week's harrowing plunge in U.S. stocks - fueled by economic fears about China and plummeting oil prices - left investors anxious and alarmed. Some wondered if it signaled an approaching recession in the United States.
The answer, most analysts say, is no.
The American economy is expected to prove resilient and nimble enough to avoid serious damage, at least anytime soon. For all the economy's challenges, the job market is strong, home sales are solid and cheaper gasoline has allowed consumers to spend more on cars, restaurants and online shopping.
The companies that make up major stock indexes are far more vulnerable than the economy itself is to distress abroad: Companies in the Standard & Poor's 500 index derived 48 percent of their revenue from abroad in 2014, up from 43 percent in 2003.
By contrast, exports account for only about 13 percent of the nation's gross domestic product - the broadest gauge of economic output.
The assertion by Wiseman and Condon that the economy as a whole isn't really "vulnerable ... to distress abroad" is really an admission that the business press's recent go-to excuse relating to any signs of U.S. economic weakness — namely the situation with economies in the rest of the world, a cop-out frequently employed by the AP's own reporters — has been a sham.
In other words, Wiseman and Condon have at long last tacitly admitted that the awful news we've been receiving for months on the state of industrial production, manufacturing, housing, retail sales and other hard-number metrics is due to the situation on the ground in the U.S. Thanks, guys.
Given that admission, the AP pair had to try to make the economy appear well-off, and did so with brazen disregard for reality (numbered tags are mine):
The disconnect between the actual economy and the price of stocks isn't new. From the waning days of the Great Recession into the tepid recovery that followed, stocks managed to gradually rise despite persistently high unemployment and tepid economic growth. Now, the opposite seems true. [1]
"Main Street is better, and Wall Street is suffering," [2] said Jim Paulsen, chief investment strategist at Wells Capital.
The broadest gauges of the economy look fundamentally sound. GDP likely expanded 2.4 percent last year, according to JP Morgan Chase. [3] (Mark) Zandi (at Moody's) foresees its growth hitting 2.8 percent in 2016 - hardly spectacular but decent, especially at a time when many industrialized economies are struggling to grow at all.
The job market appears particularly robust. Employers added an average of 221,000 jobs a month during 2015 [4] and 284,000 a month from October through December. The unemployment rate has sunk from 10 percent in 2009 to 5 percent [5], a level associated with a healthy economy.
Notes:
[1] — The Federal Reserve's multitrillion-dollar quantitative easing effort primarily explains the stock market's rise since early 2009. Forbes.com contributor Jeffrey Dorfman explained the obvious in 2013:
The Fed’s actions have depressed interest rates to such a low level that the stock market has become the only investment game in town.The manner in which the stock market indices slide on any hint that the Fed’s easy money policies may be approaching an end show that the Fed is artificially inflating the stock market.
Wiseman and Condon either know this, or should. I believe they do, but are pretending otherwise. If they really don't know this, they really need to find alternative employment.
[2] — I really don't have clean words for this. Mr. Paulsen is either delusional, or completely cut off from reality.
[3] — This sentence is journalistic malpractice. On Friday, two days before the AP article's time stamp, JP Morgan Chase lowered its full-year GDP estimate to 2.3 percent. That's not the malpractice. That lies in the AP pair's failure to note that in doing so, JPM stated that "Q4 GDP growth is still positive, but barely," and, while citing "rather shockingly weak" December retail sales, lowered its fourth-quarter GDP growth estimate to an annualized 0.1 percent. (One has to wonder if JPM felt that it had to keep the number positive to keep the Obama administration's apparatchiks and attack dogs at bay.)
So in a report about the possibility of a recession, two AP reporters gladly used a prominent firm's full-year forecast while ignoring that same firm's warning that the current quarter is shaping up to be a near goose-egg. As previous noted, this is journalistic malpractice.
[4] — Sorry, guys. 221,000 jobs per month can be described in many ways. "Robust" is not one of them. If you want robust, look at the job-growth figures seen during the mid-1980s and the late-1990s, when on a workforce-adjusted basis, monthly job growth was routinely 50 percent or more greater.
[5] — As I have stated on several occasions, there is strong reason to believe that the official unemployment rate is significantly understated because the government's Bureau of Economic Analysis is excluding millions of people from the civilian workforce because they are supposedly not looking for work aggressively enough.
The contrast between the downbeat reporting a decade ago and today's systematic denial of reality — all clearly driven by which party control the White House — could hardly be more obvious, or more appalling.
Cross-posted at BizzyBlog.com.
