The day after President Bush’s economic advisers released their official 2007 economic forecast – a story shunted to page C3 – The New York Times cast a pall on the economy, comparing current events to the economy of the pre-dot-com crash of 2000-2001.
The Business Day front pager entitled, “This Expansion Looks Familiar,” [1] suggested that a tenuous “housing bubble” is a cause of the economy’s current strength, a media storyline that has not come to fruition despite five years in the making.
“It’s striking how similar they are,” reporters Eduardo Porter and Jeremy W. Peters quoted Northwestern’s Robert J. Gordon of the 1990s and 2000s economic expansions.
Though the first expansion lasted five more years, the Times was quick to discount this one. “Few economic forecasters expect the current growth cycle to have the length and vigor of the 1990s boom, which continued for 10 years from trough to peak,” read the story.
The reporters turned to a former Clinton adviser to cast a dark cloud on the economy.
“In both situations we had overinvestment, now in housing, then in fiber optics,” the Times reporters quoted Joseph E. Stiglitz, Clinton’s “chief economic adviser from 1995 to 1997.”
Yet economic growth outside of the housing sector is strong, arguing against the view that the slowing in the housing sector points to larger problems for the economy.
“The U.S. economy outside of the housing sector continues to expand at a healthy pace. Job growth remains good, and this has lifted consumer confidence and spending. The weakness in housing has dampened the demand for commodities, and inflation has subsided,” Gary Thayer, chief economist for A.G. Edwards, noted in his January 2007 outlook. [2]
Thayer is not alone in his assessment. “The economy appears to be weathering the downturn in housing with limited collateral effects, and inflation appears to be easing with the aid of lower energy prices, well-anchored inflation expectations, and competitive labor and product markets, Federal Reserve vice chairman Donald Kohn [3] told the Atlanta Rotary Club in a January 8 speech.
As the Business & Media Institute (BMI) reported in November 2005 [4], the media in general have long anticipated a housing bubble burst that has not happened, and the genesis of the economic deathwatch may well have been issued from the desk of a liberal columnist at the Gray Lady.
“Four of 16 media reports in 2001 that referenced a housing bubble were either written by or cited New York Times economic columnist Paul Krugman. Of particular note was a September 30 Times article by Krugman entitled ‘Fear Itself,’” BMI noticed in a Nov. 30, 2005, “Media Myth” report.
“[E]ven if they were wrong,” liberal columnist and economist Krugman said of analysts who foresaw a housing bubble, “how solid a recovery could we have from housing alone?”
Aside from the discredited housing bubble storyline, The New York Times has a track record of downplaying or misreporting good economic news under President Bush while it cheerlead good economic developments under President Clinton’s watch.
“Only one employment story during the Bush reelection campaign was positive or just 8 percent (one of 12 stories),” BMI reported in its Oct. 14, 2004, report, “One Economy, Two Spins.” [5]
TimesWatch.org, a publication of the Media Research Center, the parent organization of BMI, has repeatedly documented Porter and Peters, among others at the Times, downplaying strong economic news.
For example, one month before the 2006 elections, TimesWatch [6] found Porter pushed a negative spin on strong jobs numbers, quoting an economist for Deutsche Bank suggesting that “the best news on job creation is behind us.”
Yet, the unemployment rate at the time had dipped to just 4.6 percent.