Fearmongering about the economy by the media

The media is at it again, trying to spin and distort economic news to present it in as negative a manner as possible for their own commercial advantage. The monthly employment report on Friday showed a decline of 63,000 jobs which is a very modest decline. And, in fact, the overall unemployment rate declined. Nonetheless, an article in The New York Times by Edmund Andrews entitled "Sharp Drop in Jobs Adds to Grim Economic Picture" gives a very distorted view of the employment report. A decline of 63,000 is not a "sharp drop", not even close. A sharp decline would be a loss of 300,000 jobs or more.

The lead paragraph is a typical peiece of fearmongering:

The worst fears of consumers, investors and Washington officials were confirmed on Friday, as deepening paralysis on Wall Street collided with stark new evidence of falling employment and a likely recession.

"Worst fears"? Hardly. "Deepening paralysis"? Hardly. "Stark new evidence"? Hardly.

The article goes on to say "In a report that was far worse than most analysts had expected, the Labor Department estimated that the nation lost 63,000 jobs in February." Okay, sure, the number was larger than the analyst estimate, but if the number is still a relatively small number, how could it possibly be "far worse"? This is nothing less than blatant fearmongering.

Then The Times tells us that "Though monthly payroll data are notoriously volatile and subject to revision, the jobs report was so bleak that many of the few remaining optimists on Wall Street threw in the towel and conceded that the United States was already in a recession." What was bleak was the media coverage, not the report itself!! Here is what the actual report said in its lead paragraph:

Nonfarm payroll employment edged down in February (-63,000), and the unemployment rate was essentially unchanged at 4.8 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.  Employment fell in manufacturing, construction, and retail trade.  Job growth continued in health care and in food services.  Average hourly earnings rose by 5 cents, or 0.3 percent, over the month.

The official characterization of "edged down" is correct. What is highly improper is the Times characterization as a "Sharp Drop."

Most of that paragraph is actually either benign, bland, or even positive. People already knew that construction and manufacturing were losing jobs, so there was no big new news there. In fact, if there was any real news, it was that the report did not confirm the prognosis of a "deepening recession." If  we were to start seeing losses above half a million over two or three months, that would be a "harbinger" of recession, but we simply are not even close to seeing such numbers at this stage.

I could go on, but frankly the overall thrust of the article doesn't warrant that much more of my attention.

To hear The Times tell it, a recession is already underway ("Many firms had already concluded that a recession was under way. Within minutes of the new report on employment, many in the dwindling pool of optimists changed their positions.") But, I would simply note that the pragmatic Intrade Prediction Market indicates a 68.5% probability of U.S. recession in 2008. Yes, that means that people are betting that a recession is fairly likely, but if the U.S. economy were as clearly in recession as The Times insists, that number would be way up at 95% or above. Clearly, there are a lot of people (31.5%) who do not find the evidence as convincing as The Times tries to sell us.

I wish The Times would get back to objectively reporting the facts.

-- Jack Krupansky