CNN's 'Your $$$$$' Scours the Nation for Recession Hints
The national economy continues its strong performance, but “Your $$$$$” co-hosts Ali Velshi and Christine Romans were looking hard for bad news.
In October, 166,000 jobs were added, twice the expected growth rate. General growth as measured by the gross domestic product was estimated at a robust 3.9 percent for the most recent quarter.
That meant CNN didn’t find a national recession and had to look for trouble on the state level.
“There are some states … where people are feeling all the elements of a recession already,” Velshi said. Earlier in October, Velshi told viewers “the bottom line is to most Americans, a recession is what it feels like to you.”
On the November 3 show, a color-coded map of the United States depicted state-by-state unemployment rates. The CNN hosts also used gas prices in some states to suggest the possibility of a future recession.
In a segment labeled “Recession Fears,” guest Anirvan Banerji from the Economic Cycle Research Institute assured viewers that there was nothing to fear. Still, Romans asked her guest if a recession was coming.
“Not yet. This is the Energizer bunny economy,” Banerji replied. “Look, people have been predicting recession for years … [and it] doesn’t happen. And the reason is that as long as people have jobs, ok, you have to tighten your belt … but you can still keep going.”
But Romans did not give up on a recession somewhere for someone. Later in the program she said, “We can talk about averting a recession, but for some families, I mean, there’s no doubt there is a crunch.”
Mark Zandi of Economy.com also put in an appearance – which was mostly gloomy, except he admitted that “I think its right to be optimistic we'll avoid recession, but we're going to have a few bumps in the next few months.” He added, “This economy is still struggling.”
But not the entire country. The national unemployment rate is a low 4.7 percent. Three states that may be in a crunch with worse-than-average numbers are Michigan with the highest unemployment rate at 7.4 percent, California at 5.5 percent and New York with 4.9 percent.
CNN regularly uses the price of a gallon of regular gas as a measure of household pain in the pocketbook. The national average from the AAA Daily Fuel Gauge Report is $3.004. The three sample distressed states come in even higher at:
Michigan with $3.172 per gallon.
California with $3.255.
New York with $3.131.
Unemployment and high gas prices may be leading indicators of economic distress, but there are other factors of local distress seldom mentioned by CNN.
For example, those three states with above-average unemployment rates and high gas prices seem to have other challenges missed by “Your $$$$$.” That includes challenges that are indeed causing distress for local populations, but would not indicate that a recession is coming to the country at large. The most important is a factor not caused by business cycles, but caused by a state’s economic policy: taxes.
These states with higher unemployment and higher gas prices also have a higher-than-average state tax burden. According to the Tax Foundation, Burden by State,
Michigan’s state tax burden is the 14th highest of the 50 states.
California’s burden is ranked 12th.
New York’s ranking is 3rd.
And when the average American family is faced with the bad news of a job loss, a high cost of living and heavy state taxes, what can they do?
Move out of that state.
For more than 30 years, United Van Lines has tracked the movement of the American population. The moving company publishes a yearly study on migration from state to state. The measure is of outbound and inbound shipments of households. The 2006 study showed:
Michigan had 6,816 outbound shipments and only 3,509 inbound.
California had 27,435 move out and 23,424 move in.
New York had 10,354 leave and 7,040 come in.
In the United States, a rational person can move away from economic pain and toward opportunity. The rational family will move away from a state with high unemployment, away from a high cost of living and away from high taxes. This is good news.
The average, common man may be more rational than the average CNN host.
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Jack Yoest, a freelancer for the Business & Media Institute, is president of Management Training of DC, LLC and teaches business at the Northern Virginia Community College.
