TCS Daily

Strong Economy, Weak Coverage

By Meg Kreikemeier - February 9, 2006 12:00 AM

With the advent of a new chairman of the Federal Reserve Board, many are contemplating the health of the economy and future actions needed by the Fed. So how is the economy doing, and has the coverage of its recovery been balanced? Consider some healthy economic results which were released in late November and early December 2005:

  • The Gross Domestic Product (GDP), a key measure of economic expansion and contraction, increased by 4.3 percent in the third quarter in spite of the devastating hurricanes. Since the second quarter 2003, GDP has grown over 3 percent each quarter.

  • The November unemployment rate was 5 percent, where the rate has been hovering since May. (The unemployment rate has since dropped to 4.7% in January).

  • Continuing the solid monthly trend in 2004, 215,000 jobs were added to the economy in November.

  • Productivity, an indicator of rising living standards, rose more than expected during the third quarter and increased at its highest rate in two years.

  • A survey of America's leading CEOs, the Business Roundtable's CEO Economic Outlook Survey, showed that they expect "broad strength in the economy moving into 2006." The CEO Economic Outlook Index for December 2005 was at 101.4. The index is "centered on 50, which means anything above 50 is expansion and anything below 50 is contraction."

So where were the glowing headlines about the economy?

A perusal the New York Times and the Chicago Tribune in late November and through mid-December revealed that almost all of these positive economic trends were found not in the headlines but on pages two or later in the business section.

The New York Times published one front page article, "Upbeat Signs Hold Cautions For the Future," where the writer hedged the recent results. After noting that gasoline prices had dropped, consumer confidence had increased, new home sales had hit a record, the stock market had finally risen, after remaining relatively flat for years, and factories were expecting a "happy holiday season," the New York Times wrote:

"By most measures, the economy appears to be doing fine. No, scratch that, it appears to be booming. But as always with the United States economy, it is not quite that simple. For every encouraging sign, there is an explanation."

Well, yes, there's always an explanation. And here's an obvious one: no economy is perfect.

Case in point: In 1996, with the economy humming along nicely, Alan Greenspan warned about irrational exuberance. In the speech where Greenspan coined the phrase he expressed concern about "unduly escalated asset values, which then become subject to unexpected and prolonged contractions."

Four years later in March 2000, the technology-heavy Nasdaq reached its peak, and the technology bubble began to lose gas. The economy dropped jobs in the months of June, August and October 2000, and job losses continued in 2001 through May 2003.

And this highlights the other obvious fact about economics - as a dynamic system, the economy waxes and wanes over time.

Certainly it would be ideal if the budget deficit was smaller and gas prices were lower. High gas prices, in particular, not only dampen consumer spending, they also impact manufacturers by driving up operating costs.

But one can always find fault with a component, sector or region. For instance, fourth quarter 2005 GDP growth at 1.1% did not meet expectations. Is it a sign of deterioration or just a bump in the road? According to Market Watch, Treasury Secretary John Snow predicted the result would be revised upward in future months. That isn't a reason, however, to paint over big improvements with small qualifiers.

Two days after the New York Times reported its story, the job surge in November was released, and, interestingly, both the New York Times and Chicago Tribune wrote articles -- not so much about the strength of the result -- but about President Bush's attempts to claim credit for it.

Is it any wonder than that a November poll by the American Research Group, a non-partisan polling organization that has conducted monthly economic surveys since 1985, showed 43 percent of Americans thought the economy was in a recession?

In fact, the lack of headlines prompted a search of the Lexis Nexis database to compare magazine articles written about the topic of economic recovery for President Clinton in 1993 and 1994 and for President Bush in 2004 and 2005; years when the economy began to show significant improvements for both presidents.

The search turned up 320 articles for President Clinton and 260 for President Bush. The searches produced articles published by well-known news magazines, financial publications as well as trade publications.

A review of the magazines revealed that far more articles were written about President Clinton in the weekly news magazines whereas the bulk of the articles written about President Bush were found in financial and trade magazines and in right-of-center publications like The National Review and The Weekly Standard.

Most glaring was the disparity in coverage by both US News and World Report and Time Magazine.

Not only did US News and World Report and Time Magazine publish significantly more articles about Clinton, but the tone of the articles was very different, as well.

As an example, Time Magazine published the following articles about economic recovery under President Clinton: "Overturning The Reagan Era," "Picking Up Speed," "Breaking Through," and "Who Needs a Boom?"

At a time when unemployment was at 6.5 percent, and GDP was forecasted to be 3 percent in 1994, Time Magazine wrote, "which would be no boom, but maybe something much better: a pace that could be sustained for a long time, keeping income and employment growing without igniting a new surge in inflation.... The circle (of spending, production and hiring) may not spin fast enough to produce a boom -- but who wants one anyway? Moderate, steady growth is better."

Now compare it to the one Time Magazine article ("How Real is the Squeeze?") written about economic recovery under President Bush. Keep in mind that at the time the article was written GDP grew 3.9 percent in the first quarter of 2004 (which was subsequently revised upward to 4.3 percent) and unemployment was at 5.6 percent.

"Jonathan Thornton finally found a job this spring after six months of unemployment. "My wife and I almost parted ways after 13 years because of the financial strain," he says. When he started work in April as a crane operator at a screw manufacturer in the Cleveland, Ohio, area, Thornton treated his wife Rita to a few little luxuries -- a day at the salon, an evening out with the girls. "My outlook has definitely brightened," he says. But Thornton's optimism goes only so far. His paycheck has grown, but the family is still just getting by.... There's supposed to be an economic recovery under way. But the numbers paint a confusing picture."

So where's the comment that "moderate, steady growth is better," particularly when the GDP growth and unemployment rate were better in 2004 than in 1993?

One would expect that a recovery from a recession would garner as much attention as any previous recovery and at least as much attention as the descent into one.

But it may be that the good news is finally reaching the public. The American Research Group found that in December only 28 percent of Americans believed the economy was in a recession, and 59 percent thought their financial situation was either "good," "very good," or "excellent."

That's good news, indeed!

Meg Kreikemeier is a writer and a former analyst at CNA Insurance.

Notes, Data, Other Links:

Stock Market Highs
Unemployment Rate Table 1992-2005
GDP 1992-2005 by quarter



Glowing headlines
It's very nice that the US GDP has managed to maintain an annual growth rate of three percent. Meanwhile that of Venezuela, according to the CIA Factbook, has grown at a rate of 8.3% in 2005. So where are the congratulatory headlines there?

Of course, they sell us oil. Let's instead take the famous basket case Argentina-- similarly burdened with a leftist, America-spurning government. Well gawrsh, from the same source, their growth has been 8.2%! And them with no oil!

About the only thing these two places have in common is that they have turned their backs on the IMF's bitter medicine, that has hampered Latin American growth for so many years. In a word, they have unglobalized their economies. And their GDP's have rebounded like a helium balloon a child has let go.

I think that would be worth a headline or two. Don't you?

Read Krugman
These are the best Bush years, fuled by massive stimulating budget deficits, and still they are ho hum by historical standards. With all that economic huffing and puffing, Bush just caught up to Clinton not in job creation, but in number of jobs, which had to decline before they could go up. Then there's the median real income, which has fallen and continues to fall. Did you mention the savings rate?

Writer shows a vast lack of understanding GDP growth. The economy does not grow 3%, or whatever, per quarter, but at an ANNUAL RATE of 3% per quarter. The figures used in the article would give one to think that the annual rate might exceed 12%.

Frustrating Times for the Anointed
"The American Research Group found that in December only 28 percent of Americans believed the economy was in a recession, and 59 percent thought their financial situation was either "good," "very good," or "excellent.""

The 21rst century is an era of expanding information dissemination. It is increasingly unlikely that systemic media/institutional bias can be effective in the long run.
For the self-anointed ones, who know best and have embraced their destiny to control and save us, these are frustrating times indeed.

I dunno
"For the self-anointed ones, who know best and have embraced their destiny to control and save us, these are frustrating times indeed."

Seems like Karl Rove is doing pretty well.

mirage of strong economy
Getting a new credit card and spending up to the limit doesn't mean you're doing well financially. The national economy is doing just that with deficit spending and the fed easy money policy. They're lending money for a lesser rate than the actual inflation rate (as opposed to the cooked CPI numbers). People have a sense for this stuff and thats why the so called recovery seems like a recession to so many people.

If you want the latest DNC lies
Deficit spending does not cause economic growth. Keynes was wrong. Regardless, as a percentage of GDP, the real deficit is barely bigger than it was back during the Clinton years.

As to income, that too is at best misleading. It includes a large increase in the number of people working part time jobs (voluntarily, if you read the polls) It also doesn't take into consideration that almost all economists believe that the price deflator overstates inflation.

As to 4% being ho-hum by historical standards. The best sustained growth rate in 50 years is just ho-hum in your books?

I dunno...I would agree
“Seems like Karl Rove is doing pretty well.”

Ok, let examine Mr. Rove’s accomplishments:
1) Elective Office -- None
2) Appointed Office – not on Supreme Court…yet.
3) Military Victories…none.
4) Medical cures discovered…none.
5) Scientific breakthroughs…none.
6) Percent of TV, Radio, Print or Blogger market…none.

Mr. Rove has done nothing of note. He has a niche job and his boss appears happy with him. He is just like the rest of us. There is no evidence that Mr. Rove is a threat or a savior. He appears not to be an opinion leader of any kind. Mr. Rove is a behind the scenes technician, not a public force [like the New York Times or Pat Robertson] trying to influence the destiny of America.

There is a very large list of those who would “save” America…but Mr. Rove is hardly on it.

HighGas price---BUNK!!!
I made 50 cents an hour packing groceries at Kroger in 1960. Gas normally cost around 25 cents a gallon. It often went up to 30, occasionally as low as 20 cents. My son made $8.75 packing groceries in the exact same Kroger in 2002. Increase by a factor of 17.5 in pay. Multiply 20 cent gas by 17.5 and get $3.50 gas. We never saw that even during Katrina. My 30 cent gas would translate to $5.25 by the same measure. I still have my high school car. Except it was 9 years old then, and had 100,000 miles on it. I have since restored it to the condition my grandfather took delivery from the new car dealer. I can't get 15 on the freeway, which didn't exist in 1960. My son's Crown Victoria had a digital dash that said that over its' 230,000 mile life, it averaged 23 MPG.
The reason Americans buy SUVs is that we need the room for our 6 foot tall kids, the infant car seats we are required to have, and gas is cheap.

The 4th estate is a 5th column ! ! ! !
We now have a three-party system. The third political party is the MSM (main stream media). It is anti-American and closely allied with the other venal Democrat Party. The MSM buys ink and electrons by the barrel to harangue the American People into misreading their own unequalled prosperity; and to turn a U.S. military and diplomatic victory into a defeat, as they did for the Viet Nam war.

When Reagan's enemy, the press, would ask him why the polls showed his policies to be so unpopular, he said he could understand it because of the warped view presented by from the press.

Shallow analysis
One tiny difference between the Clinton and Bush administrations...In the bush administration, the media had a WAR to cover! And terrorism, etc. Although the Lewinsky scandal obviously consumed a lot of headlines, for most of Clinton's presidency there was less going on in the world and country than there is today. Bush enjoyed a few monts of this pre-9/11 when sharks and Gary Condit were the pressing issues. Besides, 260 versus 320 - that's 20%, not exactly profound

Vote MSM
Put down the pipe Donny-boy, you've had enough.

You gonna vote for the MSM in the next election? You know, because its the third party and all. How moronic.

Yes, and the media is anti-American too. Love it or leave it. Maybe the media should move to Russia, where they have real freedom of the press. If you can't stand to hear anything bad about your country, maybe you should move to Russia too. Then you could officially become anti-American, instead of staying in the closet about it.

And yes, the media makes us misread our own prosperity. I have to pause to laugh at this point. I thought I was a millionaire, I was mad because I wasn't getting tax cuts like I should, but then the media told me that I'm just middle class. Now I understand why I'm not getting tax cuts.

And the media lost the Vietnam War for us? And I thought it was the cowardice of our government. You sure it wasn't the hippy protestors that lost it for us? Anybody's fault but your own, I'm sure.

Man, talk about warped view. If the American press is warped, I shudder to think of Don's level of warped-ness. This isn't Iran you idiot, this is America, freedom, even if you don't understand what that is. Then again, you have the freedom to be an idiot too, so maybe you do understand. Just try not to be so wrong all the time.

While things are humming along nicely here in the USA, the MSM and liberals alike (difficult to tell the patients from the staff these days)are much more fond of pointing to the rather large deficit.... Of couse when doing so they simply blame the president for this outrageous fiscal number, ever failing to mention the hundreds of billions spent to rebuild lower Manhattan post 9/11, bail out from numerous devastating natural disasters and fund multiple war fronts abroad and the war on terrorism in general.... None of which were ever on tap during the Clinton admin. (thankfully for all of us) God knows president Clinton was much too busy ordering pizza in, playing late night basketball games, giving away sensitive defense department information to the Chinese, pardoning criminals, feeling our pain (and everything else within reach) shooting tomahawk missles at aspirin factories, receiving council on extramarital affairs from the Rev. Jesse (Not a Reverend, cause I never graduated from divinity school)Jackson and instructing the USA via MSM with regard to what exactly the meaning of the word is, is....

You got tax cuts.
I guess the lies from the MSM were sufficient to prevent you from seeing what was in your paycheck every week.

Clinton never gave away secrets to the Chinese.

He sold them.

Just how good are Bush’s numbers?
Comparing some of the numbers may shed some light on Bush’s poor showing in the polls. Bush’s numbers generally are better this past year so I’ve calculated his first four years then, dropping the first year, and calculated his last four years.

Gross Domestic Product
From this web site:

Four-year growth in GDP in descending order.

21.81% _ Johnson
21.00% _ Truman
19.86% _ Kennedy/Johnson
17.87% _ Clinton (2nd)
15.98% _ Reagan (2nd)
13.67% _ Carter
13.53% _ Clinton (1st)
13.45% _ Eisenhower (1st)
12.63% _ Reagan (1st)
12.54% _ Bush 43 (Last 4 Yrs)
12.38% _ Nixon
10.91% _ Eisenhower (2nd)
10.62% _ Nixon/Ford
09.56% _ Bush 43 (First 4 Yrs)
08.81% _ Bush 41

Unemployment Rate
From this web site:
Series Id: LNS14000000

The movement of the Unemployment Rate over a four-year period. (A negative number means unemployment went down)

In descending order:
The Unemployment Rate went down during these four-year time frames.

-2.0 _ Clinton (1st)
-1.9 _ Reagan (2nd)
-1.7 _ Kennedy/Johnson
-1.5 _ Johnson
-1.4 _ Truman
-1.1 _ Clinton (2nd)
-0.2 _ Reagan (1st)

Carter had the same rate when he left as when he came.

The Unemployment Rate went up during these four-year time frames.

0.5 _ Bush 43 (Last 4 Yrs)
1.0_ Bush 43 (First 4 Yrs)
1.3 _ Eisenhower (1st)
1.5 _ Nixon
1.9 _ Bush 41
2.4 _ Eisenhower (2nd)
2.6 _ Nixon/Ford

Job Creation
From this web site:
Series Id: CES0000000001

Percentage of jobs created over their four year term.
In descending order:

16.54% _ Johnson
12.81% _ Carter
12.24% _ Truman
11.19% _ Reagan (2nd)
10.99% _ Kennedy/Johnson
10.49% _ Clinton (1st)
09.27% _ Clinton (1st)
08.90% _ Nixon
06.71% _ Nixon/Ford
05.85% _ Reagan (1st)
05.47% _ Eisenhower (1st)
03.03% _ Bush 43 (Last 4 Yrs)
02.42% _ Bush 41
01.50% _ Eisenhower (2nd)
-1.55% _ Bush 43 (First 4 Yrs)

It could be that Bush’s poor poll numbers accurately reflect his performance.

You got me foolish one
You got me marky mark, I did get a tax cut, a tiny little meaningless reduction that was swallowed up by increases in health insurance premiums.

Is a tax cut still a tax cut if the cut-ee perceives it as meaningless? If only I made a few hundred thousand dollars more than I do, I would know what a tax cut really is under Bush.

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