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What? The news isn't accurate? Print
Written by Mike Noel   
Wednesday, 20 August 2008
Let me start off by saying that I am not a conspiracy theorist.  I don't believe that there is a massive, widespread, and purposeful effort to misled most citizens into thinking a certain way.  That being said, I believe it is possible, in fact, unavoidable, for the things we encounter on a daily basis to affect our thoughts.  With that preamble out of the way I'd like to point out a new article that I found quite interesting.  On the article, Study faults news media’s economic coverage, shows that the majority of news stories covering financial topics are negative and are based on outdated data.

So we are innundated with news stories descrying the bleak outlook for all of us.  This, of course, perpetuates the problem.  A "recession" happens when people stop spending money.  I don't just mean frivalous spending, I mean all types of spending.  For better or for worse, money is the engine that keeps America running.  I spend a few dollars buying groceries at the local grocery store, the store now has money to pay one of their highschool employees, that highschool employee now has money to buy a song off of Amazon.  Amazon now has a bit more money to spend on network equipment.  The network equipment manufacturers now have a bit more money to spend buying electronic parts from the hightech company I work for.  The hightech company I work for now has a bit more money to pay me.

This same scenario happens billions of times per day in America -- unless we stop spending money.  What if I didn't buy those groceries?  At first the highschool student is still going to get paid.  Eventually, though, the store won't have money to pay the student so he will not get paid and the whole chain falls apart.   

Negative financial stories have a dampening affect on the economy.  People read the negative articles and then decide that maybe they should just stay home this weekend instead of going to the movies.  As more and more people make these decisions the economy continues to slow down.  It is a bad downward spiral.  I'm not sure what it takes to get out of this.

However, I'm just pointing out how negative financial articles can affect the general sluggishness of the economy.  If the news is in fact negative then I can understand that it should be reported.  But when the news is not negative then I can't help but wonder why people are reporting it that way.

I'm not a brilliant economist who is the only one who has figured out how the economy works (far from it!).  I suspect that nearly all of the people involved in writing financial stories are much more informed than I am about how these things work.  So they know that the accumulation of all of the negative stories has a net negative impact on the economy.

So why do it?  I don't know.  Back in the 1992 presidential election we saw the same thing.  Leading up to the election the newspapers (we didn't have the Internet back then like we do now) were full of stories about how bad the economy was.  Doom and gloom.  Death and destruction.  The presidential candidate Clinton made the economy a major part of his campaign (It's the economy, stupid ).  Yet, on Wednesday, the day after the election, the headline of the newspaper was that the recession was over!  If you read the article you would find that the numbers indicated that the recession had been over for 6 months.  Funny how that little bit of information didn't make it to the public until after the election that depended so heavily on the economy.

I strongly suspect a similar situation this election year.  If Obama wins, the clear media favorite, then within a week we will hear that jobs are up, the housing market finally bottomed out and is in an upswing, and the credit crisis is over.

It's a little frustrating but I guess that's just the way the world works.



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