Posted on 8 March 2008

How much is the state of the economy a result of media hype?

Kiley Newbold, fellow blogger and colleague, asked the following question on LinkedIn:

How much is the state of the economy (I.E. the alleged impending recession) a result of media hype?

I am convinced the media plays a major role in stimulating or slowing the economy. Please share your thoughts on this. To what extent will the media hype (and the public reaction) be responsible if the US enters an official recession?

To which I replied…

Recession is part of the pie. You can NOT have expansion without recession. They are forever linked. Like the waves of the ocean–you can not have a high without a low. Like the old song says, “Baby… that’s just the way it is, baby.”

A few things to consider:

  • Contrary to popular opinion, that somehow “the Fed” or the President’s Economic Policy has something to do with the recession, there has been a recession in the United States of America EVERY SIX YEARS since 1776, except for the period between 1990 and 2000. That was the longest economic expansion in history, blamed mostly on the Internet’s ability to radically reduce cost and spread resources to the most-efficient markets.

    What the government CAN do is try to prevent a deep recession, a depression, and control inflation… but there will always, always, always be corrections and recessions.

  •  This last period of economic expansion officially started in 2001-2002. Forward six years and you have THIS YEAR. We’re DUE.
  • Except for one outlier (1990-2000), statistics prove that recessions are normal, recurring and important to the general economic health of a country. The GDP has always been HIGHER at the high-point of the NEXT expansion than the last, so we’re always growing. And, other than the Great Depression, the trough of the recession has not really ever been AS BAD as the recession before.
  • Finally, there has never been a recession in an election year before. If a recession does hit this year, it will cause incredible stress on the candidates when all the OTHER issues will take a backseat to the one issue: MY MONEY. Get a good seat. This will be a good one to watch.

Besides, when has the news or the media really EVER been out in front of a trend. They don’t care about creating anything…. they only want EYEBALLS watching their program, so they will scour all the possible stories to find the one story just ghastly enough to get people to “tune in at 11” and find out

2 Comments For This Post I'd Love to Hear Yours!

  1. Rand Says:

    The outlier is also a bit of a fluke. How much of the econmony holding up until 2000 was due to the creative accounting that took over much of the business world in the 1990s. People cut back on their spending when the see the economy slowing down. Corporations reporting profits while they are actually losing money held up the stock market and probably prolonged consumer spending for a couple of years beyond what normally would have occurred.

    I would love to see an analysis of what the economy would have looked like in the late 1990s if corporations had been reporting actual numbers. I think you would have seen the Internet bubble burst in about 1998.

  2. Robert Merrill Says:

    @rand Wow. I don’t know why I hadn’t really thought of all that. I think you’re right…

Leave a Comment Here's Your Chance to Be Heard!