There’s bad news and then there’s CNN’s “American Morning.” The May 23 broadcast warned of a “tipping point” for the economy, and anchor John Roberts asked an economist whether we were facing the “the D-word,” meaning depression.
That’s an interesting position to take, given that The Wall Street Journal just a week ago highlighted how the economy might not even hit a recession.
But that wasn’t the position both Roberts and economist Lakshman Achuthan took. When Roberts asked, “Have oil prices got us at a tipping point in the economy here?” Achuthan said simply: “The short answer is yes.”
Achuthan, managing director of the Economic Cycle Research Institute, immediately said he would be “backing off that answer.” But instead he went forward, first claiming the United States is in a “mild recession.” Then he said if oil hits $150 a barrel, “we start talking about something worse than a mild recession. Another leg down, and that I think is very, very worrisome.”
Roberts followed Achuthan’s predictions of recession with his own negative outlook. “What about the big ‘D’ word?” he asked. While Achuthan said he didn’t expect things will “go that far,” he did warn of gasoline hitting $5 a gallon.
“Well, I'm seeing people starting to think about towards $5 now on the tank of gas,” he said. “I think that's within striking distance because of a speculative bubble. It's tough to put speculation back into a box once it starts.”
Along with that, it was a mixture of metaphors depicting doom. Roberts asked “How deep do you think this is going to dig?” and “How deep do you think this is going to bite?” and Achuthan compared it to a “laser beam” hitting “middle class, lower middle class, lower income” earners.
The report did include one reason for Roberts’ pessimism. He mentioned an e-mail from one viewer who said he had to cut his own satellite TV subscription because of high gas prices. “Goodbye to CNN, thanks very much. I’m going back to a terrestrial antenna to pick up the off-air signals,” said Roberts.
Not all economists think doom is imminent. “[M]any economists think the government’s earliest estimate of first-quarter GDP growth – 0.6 percent – will be revised upward,” according to the May 14 Wall Street Journal. [1] The Journal was even more upbeat, saying “Despite Pain, Economists Begin Dialing Back Dire Forecasts.” According to the article, Wachovia Corp. has lowered its odds of recession to 45 percent, down from 90 percent just last month.