The economy: the good news keeps getting worse

Larry Elder

3/23/2006 12:05:00 AM - Larry Elder

In February, our economy created 243,000 new jobs.

Yet one of our major newspapers tells us almost half of Americans consider the economy in a recession. American Research Group's latest monthly survey found 59 percent of Americans rate the economy as bad, very bad, or terrible. Why are Americans so negative?

Compare the first few paragraphs of this particular story by Investors Business Daily to the way the New York Times reported the story.

Investors Business Daily, paragraph 1: "U.S. companies in nearly every sector increased hiring last month, lifting job growth to better than forecast levels and enticing more people into the labor market."

New York Times, paragraph 1: "American employers added 243,000 jobs in February and workers posted their highest salary gains in more than four years, the government reported yesterday, igniting concerns among many Wall Street economists that higher wages could fuel inflation and increase expectations that the Federal Reserve will raise interest rates further." [Emphasis added.]

Note the New York Times felt compelled to add a "but" or a "cautionary note" to the economic expansion. Someone made a decision to add a cautionary note, not that the proviso is wrong, or necessarily inappropriate, but it absolutely changes the tone of the story. But couldn't one also accuse Investors Business Daily of failing to provide balance by omitting this cautionary note?

No, for America's economy, by virtually any standard, remains an incredible economic powerhouse. From 2003 to now, the economy created 5 million jobs. Payrolls expanded for 30 straight months. Following Bush's 2003 tax cuts, federal tax revenues grew from $1.9 trillion in 2004 to $2.1 trillion in 2005. The monthly inflation rate for February 2006 stood at .20 percent. And 68.6 percent of Americans own their homes, a historical high.

Investors Business Daily, paragraph 2: "Nonfarm payrolls expanded by 243,000 in February, topping views of 210,000 and boosted by hiring in construction, financial services and health care, the Labor Department said Friday."

New York Times, paragraph 2: "But [emphasis added] some economists cautioned that employment is benefiting from the exceptionally mild weather in January and the beginning of February, and that employers' demand for workers is unlikely to remain as strong in the coming months." (In other words, oh, sure, things look good now, but just you wait, says the New York Times. Expect things to get worse.)

Investors Business Daily, paragraph 3: "The jobless rate, based on the separate household survey, edged up to 4.8 percent from January's 4.7 percent, a 4 1/2-year low. That's due to more people looking for work."

New York Times, paragraph 3: "'This report is good, but it does not say the economy is booming,' said David Kelly, senior economic adviser at Putnam Investments, the mutual fund concern in Boston." (So we exist in a non-booming economy -- an economy that withstood the 9-11 terrorist attacks, wars in Afghanistan and Iraq, and hurricanes Rita and Katrina.)

Media Research Center (MRC) examined the year 2005, specifically how ABC, NBC and CBS covered employment news. In 2005, the economy created 2 million jobs. According to the MRC, however, more than 50 percent of the stories involved job losses rather than gains.

Professor John Lott, economist and resident scholar at American Enterprise Institute, and Kevin A. Hassett, the Institute's director of economic policy studies, examined, among other things, newspapers' economic political bias as reflected by their headlines: "We found that newspaper headlines reporting economic news on unemployment, gross domestic product (GDP), retail sales, and durable goods tended to be much more frequently negative when a Republican was in the White House. And this was true even after accounting for the economic numbers on which the stories were based and how those numbers were changing over time."

In other words, all other things being equal, positive economic news under a Democratic president becomes even more positive news. Positive economic news under a Republican president suddenly becomes less positive news. And, on the other hand, negative economic news under a Democratic president becomes less negative news, while negative economic news under a Republican president becomes even more negative.

Consider the Investors Business Daily and New York Times headlines about the 243,000-jobs-created story.

Investors Business Daily: "243,000 New Jobs in Feb.; Wage Gain Best in 4 1/2 Years."

New York Times: "U.S. Says [emphasis added] Employers Added 243,000 Jobs in February." (The U.S. "says"? As opposed to whom? The Taliban? In other words, the Bush Administration claims or asserts or advances the notion. Can you really trust what the Bush Administration "says"?)

Hassett and Lott write, "We also found that positive headlines explained whether people thought that the economy was getting better more than the economic variables themselves. Newspapers are indeed important." Few of us read dry, economic articles A-Z. Headlines matter.

Sometimes good economic news is simply good economic news -- unless, of course, a tax-cutting Republican sits in the White House.