The media’s constant carping about an economic downturn will have consequences unless the recession rhetoric is toned down, CNBC’s Maria Bartiromo said in a February 6 “Today” show segment.
“[T]he truth is, [“Today” co-anchor] Meredith [Vieira], it doesn't matter if we’re in a recession,” Bartiromo said. “We can talk ourselves into a recession, and that seems to be what we’re doing right now and that certainly begets more weakness.”
The media coverage has apparently affected voters. According to the February 6 Washington Times [1], an exit survey from the “Super Tuesday” primaries showed 47 percent of Democratic voters and 40 percent of Republican voters said the economy was the most important issue in making their choice at the polls.
That’s in spite of the fact that any given president has little control over the economy [2], as columnist Robert Samuelson explained in the February 6 Washington Post.
Bartiromo reminded viewers what the definition of a recession is. “The fact is we don’t know if we’re in a recession yet because the definition of a recession is two quarters of negative growth and so far we have not seen that,” she said.
But indicators have shown recession criteria won’t be met, according to CNBC contributor Vince Farrell. Farrell referred to an International Strategy & Investment (ISI) [3] analysis of labor data that suggests unemployment isn’t high enough for a negative growth number during the first quarter of 2008.
“[T]ypically before a recession, unemployment claims spike a lot,” Farrell said on the February 6 “The Call.” “Now they did last week, but what you’ve got to look at is the four-week moving average, which right now is 325,000. They [ISI] estimate that the four-week moving average is going to have to be 400,000 for the GDP to break even.”
“Now, it could happen, but that is quite a spike that would have to come the next couple of weeks,” Farrell said. “So, I would take that as evidence we’re not yet in recession, maybe don’t go into recession. But, it’s very telling that the labor market is ok despite the fact that the number of new jobs created last month was anemic. It looks to me like the labor market is hanging in there.”
Bartiromo’s forewarning came right before fourth-quarter 2007 productivity data was released by the Labor Department. Worker productivity rose 1.8 percent [4], shattering analysts’ estimates of 0.4 percent – another sign of strength for the economy.