Wednesday, April 02, 2008

Business Reporting: Doom, Gloom, Sly Smiles

The stock market yesterday recorded its largest first-day-of-the-
second quarter gain in seventy years
. But Betsy Stark on ABC News last night skipped the upbeat superlatives, argued the market moves up and down like a seesaw, and essentially proclaimed the market would soon dip steeply again. Thanks Betsy. We know you are fixed on pushing the bad economic news that will bring Democratic victory this Fall. Wouldn’t want the other outcome, would we?

Investor’s Business Daily put it this way: “As the election nears, the mainstream media, unable this time to make an issue out of Iraq, are focusing on the economy on behalf of the Democrats. And they're more than a bit overwrought.”

In fact, the stock market historically rises six months before any recession ends, so a current recession still seems likely even with the market recovering. And a second quarter recession virtually guarantees a November incumbent party defeat. Furthermore, the housing market decline has yet to hit bottom. It all means that, even if the stock market is headed up, Stark is likely to have both her recession and her Democratic victory.

While biased reporting seems unnecessary, it’s a fact of life. John Lott at Fox News in a recent study documented media economic reporting bias. He found that:

• A Nexis search on news stories during [a] three-month period [of Clinton’s recession] from July 2000 through September 2000 using the keywords “economy recession US” produces 1,388. By contrast, the same search over just the last month finds 3,166. Or, even more telling, take the three months from July through September last year, when the GDP was growing at a phenomenal 4.9 percent. The same type of Google search shows 2,475 news stories. Over 78 percent more negative news stories discussed a recession when the economy under a Republican was soaring than occurred under a Democrat when the economy was shrinking.

• The average unemployment rate during President Clinton time was 5.2%. The current unemployment rate is 4.8%.

• Kevin Hassett and I looked at 12,620 newspaper and wire service headlines from 1985 through 2004 for stories on the release of official government releasing numbers on the unemployment rate, number of people employed, gross domestic product (GDP), retail sales, and durable goods. Even after accounting for how well the economy was doing (e.g., what the unemployment rate was and whether it was going up or down), Democratic presidents got about 15% more positive headlines than Republicans for the same economic news.

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