Media Use Strong GDP as Basis for 'Recession'
The Commerce Department confirmed that gross domestic product grew at a 4.9 percent pace in the third quarter – a four-year high. Instead of hailing the increase, journalists downplayed it and adopted economic gloom as their theme.
“So is this good news or bad news, Ali?” asked fill-in anchor Alina Cho on the December 20 CNN “American Morning.”
The Commerce Department confirmed that gross domestic product grew at a 4.9 percent pace in the third quarter – a four-year high. Instead of hailing the increase, journalists downplayed it and adopted economic gloom as their theme.
“So is this good news or bad news, Ali?” asked fill-in anchor Alina Cho on the December 20 CNN “American Morning.”
That answer should be clear. GDP grew from the original 3.9 percent estimate to 4.9 percent. This latest point confirmed that. However, some journalists used the increase to forecast a downturn – or even talk about recession.
“The economy is slowing down so fast this quarter you can see the skid marks as it slams on the brakes,” Stuart Hoffman, chief economist at PNC Financial Services Group, said in an Associated Press story on December 20.
The story also quoted former Federal Reserve Chairman Alan Greenspan, who isn’t optimistic:
“The big worry is that individuals will cut back on their spending and throw the economy into a recession. Former Federal Reserve Chairman Alan Greenspan and others say the odds of that happening have grown this year. Greenspan recently warned that the economy is ‘getting close to stall speed.’”
But, it went relatively unnoticed when Greenspan, on October 10, said “odds are better than 50-50 the
CNN Senior Business Correspondent Ali Velshi used the economic data to give viewers a refresher course about recessions.
“[N]egative GDP can mean a recession,” Velshi said. “In fact, typically, it’s not the real definition of it, but a couple of quarters, which means six months of negative GDP is what we describe as a recession. So many of our viewers out there think that we’re already in a recession. We’re not; we’re 4.9 percent growth on the upside. You have to be negative to actually have a recession.”
But he still had parroted theme of the day – an economic downturn is pending.
“Now, the cloud around this one is that most people suspect the final three months of this year – of 2007 – will drop to somewhere between one and one-and-a-half percent and we could go lower next year,” said Velshi.
CNBC’s Steve Leisman, on the December 20 “Street Signs,” reported the GDP data, but warned GDP growth could be zero for the fourth quarter.
“[T]here's the GDP number, 4.9 [percent],” Leisman said. “The expectation among some economists is those bars (on-screen graphic showing quarterly GDP) fall off a cliff and go down to one or two [percent]. Some say zero for the fourth quarter of the year.”
Although this data is a lagging economic indicator, there was one beneficiary of the news that hasn’t gotten much attention from the media – the strengthening of the U.S. dollar.
In November, the falling dollar was front and center with the network news coverage business coverage, including a November 12 CBS “The Early Show” segment that drew attention to supermodel Gisele Bundchen’s reported desire to not be paid in dollars (which her sister, who is her manager, claimed was “a joke by some journalist”) and the video of rap artist Jay-Z’s latest single “Blue Magic,” where he flashes a fistful of euros.
Editor's Note: This story was corrected on Dec. 21, 2007.
