Monday, September 01, 2008

Relentless Negativity Of The Media

A crumbling economy? U.S. workers didn't get the memo.
Barack Obama during his acceptance speech played a riff on Phil Gramm's impolitic remarks about a "mental recession" and a "nation of whiners." Like a succession of Democrats at the podium, he painted the economy in the darkest, most hopeless of colors -- never mind that the economy is actually growing and unemployment is still lower than it was during much of the Clinton presidency (graph above shows that the average jobless rate was exactly the same under both Clinton and Bush: 5.2%).

But here's the bad news for the dour Democrats in Denver -- most Americans don't share their economic pessimism. That's the finding of public opinion expert Karlyn Bowman of the American Enterprise Institute. "Most Americans are feeling pretty good about their jobs and their personal lives," she says after investigating the fine details of recent polls. Her report goes right to Mr. Gramm's concern about the gap between actual economic performance and the dreary negativity of politicians and the media.

What accounts for the gap between people's attitudes about their own lives and the economy in general? Bowman replies: "The relentless negativity of the media."

~Stephen Moore in today's WSJ

From p. 3 of Bowman's recent study "The State of the American Worker 2008: Attitudes About Work in America," based on Gallup poll results:

QUESTION: How satisfied or dissatisfied are you with your job/the work you do?

Clinton Years Average (1993 - 2000): 39.75% of American Workers Reported Being Completely Satisfied, 86.25% Completely or Somewhat Satisfied

Bush Years Average (2001 - 2008): 44.63% of American Workers Reported Being Completely Satisfied, 88.5% Completely or Somewhat Satisfied

22 Comments:

At 9/01/2008 8:40 AM, Anonymous QT said...

Sounds like a case of Bush derangement syndrome.

 
At 9/01/2008 9:00 AM, Blogger the buggy professor said...

Once again, Mark, we're indebted to your efforts to combat the excessive pessimism in the media about our economy's performance.

Please note though. The gap that exists in public opinion is between people's own views of their jobs and satisfactions on one side and of the thrust of our national economy on the other side. About 85-90% are very or fairly satisfied with their jobs --- though the Harris and Gallup polls showed the largest complaint was about pay.

Oppositely, about 80% find that the national economy is doing very or fairly badly, and about 80% think that the country is on the wrong track.

It is inconceivable in public opinion studies that the media could possibly shape or influence opinion to that degree --- not remotely.

There have to be other influences at work that contribute to this negative outlook --- including over 70% of opinion that regards President Bush's performance as sub-par . . . to the point that probably few Republicans in Minneapolis are unhappy that he won't be attending the convention this week.

......

No need to set out the likely candidate-influences behind these negative views of our economy, our country's direction in the last few years, and President Bush's performance in office.

I can say that these negative sentiments won't be easily reversed no matter which presidential candidate wins the November election. Right now, a non-partisan independent who finds much to respect in John McCain --- not least his record as a compromiser and bi-partisan advocate (we've had way too much polarizing politics the last two decades) --- I am leaning toward Obama, but am waiting to see how the campaign itself unfolds before deciding who to vote for. And hopefully, it will put more concrete views and plans of each candidate on display for our analysis.

.......

Once again, thank you for all these stimulating links. The US has been in the vanguard of the industrial world in shifting its basic economic structures away from manufacturing --- 40% of the US labor force in that sector in the early 1950s --- to a service-based, information-driven, high-tech economy more and more enmeshed in the global economy. We are the only country that has noticeably increased labor and multi-factor productivity thanks to our technological prowess, our entrepreneurship, our labor force's matchless flexibility and optimism about change generally, and the talents and educational levels of our people.

.

The flip side is that there has been so much change, with limited income increases to average workers (women an exception, despite their lower wages), that people are worried, rightly or wrong, and feel highly pressed and insecure.

And the financial side of our economy has been erratic and produced one mentally dislocating shock after another for a decade or so now: the dot.com bust, the accounting scandals that followed (symbolized by Enron), the hedge-fund bail-outs, the mortgage hype and collapse, the credit squeeze, and more recently high energy and food costs . . . plus, as again the Harris and Gallup polls showed, growing worries about globalizing influences and health costs and insurance-stability.

These are real problems.

The media didn't invent them, though the media has also, as your posts clearly show, ignored too much the overall macro-achievements of our economic performance since the late 1970s.

....

Michael Gordon, AKA, the buggy professor

 
At 9/01/2008 9:35 AM, Blogger Paul said...

I am VERY satisfied with my lot. I retired at 54 as a result of the great American economy. My career was spent working for others in the restaurant business. This article was reported in the Telegraph too, so the Euros can perhaps see we are not falling apart over here. The reporting of the failure of the US economy is reported with even more gusto on the in the EU than here.

 
At 9/01/2008 9:53 AM, Anonymous QT said...

Buggy Professor,

Would have to agree with your assessment. There are indeed very real problems.

It also appears evident that there is a left leaning bias in American media with under-reporting of any good news such as low unemployment, growth in tax revenue, expansion of exports, rising housing prices in 30 states (didn't see that covered anywhere but here) etc.

Media coverage has not created the present problems but it does influence one's perceptions when the reporting is not balanced. The American economy is a great deal more resilient than the media tell us.

In this case, media coverage shapes public opinion concerning public policy approaches tilting toward interventionism, and increased regulation approaches generally associated with the Democratic Party (although both parties engage in these types of policies).

Favorable media coverage is not decisive in swaying public opinion. It is the mistakes of the candidate like Obama's shifting response to the crisis in Georgia or Senator McCain's choice of a very inexperienced running mate that will shape public opinion.

 
At 9/01/2008 10:36 AM, Blogger Matt S said...

Isn't it funny how the right thinks the media is leftist, and the left thinks the media is right wing?

I think this polling question is more perception that actuality. I could have told you a year after bush took office that his policies were not going to help america, but it took 8 years for everyone else to catch up. It didn't help that war and excessive propaganda had everyone not thinking about their jobs. It's hard to have a discussion about the economy when every other news anchor is asking if you love america.

 
At 9/01/2008 10:45 AM, Blogger the buggy professor said...

http://www.demos.org/inequality/numbers.cfm

Just a couple of brief postscript remarks.

1) One of the big differences between the growth period in the Clinton era and in the Bush W era is that the Clinton boom started with much higher unemployment, which had risen to about 7.5-8.0% in the 1990-early 1991 recession. It then began to decline rapidly, this unemployment, and was around 4.0% in the very late 1990s --- with inflation contained.

The 2001 9 month recession ended with unemployment still around 5.0%, which meant the subsequent growth period in GDP and employment started with much lower unemployment . . . which, oddly, continued to rise to 6.3% in the late spring of 2003.

Essentially, then, the growth in new net jobs has been about a third in the Bush W era as it was in the Clinton era.

.....


2) Wages also differed. From 1997 until the end of 2000, the lower 20% of American wage-earners actually saw a fairly fast increase in real income --- the only time that has happened since the late 1970s and now.

Their wages have continued to fall in the last 7 years (end of the recession), and that is also true essentially of the next 20% quintile.

To put it differently, the growth boom between Oct. 2001 and now (fizzling off and on since last October 2007) saw a wage increase for average workers in a steady manner in the second period of the Clinton era. Just the opposite, for the first time since the Great Depression --- and even then, to look at just booms, for the first time in American economic history for which we have data.

Click here and go to the wage graphics: http://www.demos.org/inequality/numbers.cfm

.......

3) Whatever the cause, if you worry about national debt and fiscal deficits --- I myself don't, as long as the percentage of debt doesn't rise beyond its current 70-75% range compared to GDP (and hope it will fall in the future) --- it has reversed the impressive budget surpluses of the late 1990s.

........

So, despite a good performance in GDP growth --- as well as a sustained period of good growth in labor productivity (for which presidents have no influence, either good or bad) --- job-creation, wages (especially for the bottom 40%) at a time of soaring income for the top 10% (and especially top 5% and bang! for the top 1%), and national debt --- make comparisons with the Clinton era unfavorable for the Bush era.

.....

Add in all the financial dislocations of the last 8-9 years --- the dot.com collapse, the accounting scandals (which astounded me), the housing mortgage ponzi-scheme and collapse, the hedge-fund rescues, the credit-squeeze, and the rescues of banks and brokerage houses --- and, I suspect, you have at least some insight into the gap between people's own assessments of their situation and how they view the national economy, our country's direction, and President Bush's performance . . . not to forget the huge bungling of our initial occupation in Iraq (I supported it) that reflected blithe, blase best-case assumptions behind that occupation that were held by a tiny clique in the White House at the time and for the next four years.

.....

Michael Gordon, AKA, the buggy professor

Michael Gordon, aka, the buggy professor

 
At 9/01/2008 10:48 AM, Anonymous Anonymous said...

The money quote from the study:

There has been little change
in the responses since survey organizations started measuring them regularly in the 1970s.


In other words, the study is meaningless as there is little variability to intertemporal responses.

Now is the University of Michigan Consumer Sentiment Survey meaningless? I suppose that depends on one's political affiliation.

 
At 9/01/2008 11:41 AM, Anonymous QT said...

Buggy Professor,

"Whatever the cause, if you worry about national debt and fiscal deficits --- I myself don't, as long as the percentage of debt doesn't rise beyond its current 70-75% range compared to GDP"

I could not disagree more. Given that you have highlighted the deficits as an indictment of the Bush years, the above statement would seem to be quite ironic.

Essentially, you listen to Obama and hear a vision while I hear rhetoric and an absense of specifics. When I look at the details of the Obama plan, I see a recipe for massive deficits and a complete abandonment of the Clinton record of balanced budgets and free trade, the very legacy that you commend.

Would appreciate if you could answer just 2 questions pertaining to the Obama plan:

Are these measures necessary?
Where will the money come to pay for this plan?

BTW, you seem to have neglected to mention 9-11 in your comparison of the Clinton vs. Bush years...surely, one must also factor in the significant costs for increased security, intelligence and military expenditures.

 
At 9/01/2008 1:10 PM, Blogger spencer said...

qt -- since when did increase military and national security expenditures cause the economy to be weaker?

Throughout history increased military spending has acted as an economic stimulous.

But leave it to Team Bush to throw a war that failed to stimulate the economy.

They can not get anything right, can they?

 
At 9/01/2008 1:23 PM, Anonymous QT said...

Can't get some of these proposals out of my head. Like this one:

"Eliminating income taxes for senior citizens making less than $50,000.00"

The wording does not indicate that this is family income so one must assume that I assume that this proposal applies to individual income. Why is a senior earning $49,999 a year considered poor? Is $50,000 the new poverty line? This isn't catfood territory.

I can see eliminating taxes for low income seniors (ie. those earning less than $25k) and reducing taxes for seniors by raising the age deduction for seniors.

Perhaps, someone can explain what I am obviously missing.

Perhaps, someone could also explain to me why a foreign tax credit is a tax loophole.

 
At 9/01/2008 1:29 PM, Anonymous QT said...

Spencer,

Excellent point. Score one for the Clinton team.

Actually, I think most people continue to under-estimate Bill Clinton.

 
At 9/01/2008 1:38 PM, Anonymous Anonymous said...

Attributing magical economic powers to the office of the presidency is a mistake, regardless if they have a parenthetical "R" or "D" after their name. The president doesn't control the nation's purse strings.

Matt S's cynicism and bias is revealing. Both of those flaws amplify his pessimism. Sad.

skh.pcola

 
At 9/01/2008 5:08 PM, Anonymous QT said...

Anon.

Thanks. That's the best news I have had all day. The founders seemed to be very forward looking in their approach of setting each branch of government against the others.

In Canada, the majority can pass whatever they like and stack the senate to rubber stamp their policies. In contrast to the U.S., the prime minister appoints all federal and provincial supreme court justices.

While the partisan scraping can be aggranoying at times, the U.S. system likely results in better public policy by limiting the intrusiveness of government and ensuring that public policy must have broad support to become law.

I am sure that McCain has some misguided ideas too like the gas tax holiday.

 
At 9/01/2008 5:38 PM, Blogger the buggy professor said...

Just two or three added statistical facts to round off our discussion:

1) On the positive side of the Bush W years, the US economy outperformed virtually all the advanced industrial economies growth rate in GDP. The exception is Ireland, and in the last four years Sweden. Spain, a poorer country than Sweden or Ireland --- 9 million and 4 million each, with Spain around 40 million --- is still benefitting from convergence catch-up growth with the richer EU northern countries and grew about the same in the last 4 years.

That is a positive for the US, the case, by the way, for roughly the last 18-20 years . . . convergence catch-up with the US by Japan and Germany ending by 1990 or so, with the US lead over them in per capita income noticeably increasing: roughly 25-30% higher than either.

....

2) Judged by its own terms or compared with the Clinton years, the Bush W period isn't nearly as impressive:

* Net job creation in the Clinton era was 21 million. In the Bush W. era it was 6.5 million earlier this spring (and probably dropped a tick or so since then).

* Between the start of 2001 and the spring of 2008, GDP growth averaged around 2.8% . . . and if you subtract the 3 quarter recession that had nothing to do with the Bush presidency, it would rise to around 3.0% annually.

Nothing to sneeze at, but about 0.4% lower than the average annual growth of GDP of 3.4% in the upswing stage of the US business cycle between 1949 and 2000. The Clinton 8 year average was 4.0% annual GDP growth. (Source for Clinton era: http://clinton5.nara.gov/WH/Accomplishments/eightyears-03.html

....

3) Finally, contrary to what Obama said in his acceptance speech, median family income has inched up in the Bush W. period. But it grew 10% in the Clinton period.

.....

4) Likely costs: what do we know about Obama's and McCain's proposed tax cuts and spending plans so far?


Well, those who question how much Obama's proposals will increase national debt are perfectly on target in doing so.

The same holds true, though, for McCain's proposals (including his tax cuts, like Obama's). The neutral Tax Policy Center finds both are over-optimistic about what they can cut and what revenue will be.

Here's a summary put out by Newsweek's FactCheck.org precis:

" . . . But Obama's claim is misleading on another level. According to the nonpartisan Tax Policy Center, "without substantial cuts in government spending" Obama's plan – and McCain's, too – "would substantially increase the national debt over the next ten years." Obama spokesman Tommy Vietor told FactCheck.org that the Tax Policy Center's analysis "fails to take in account Senator Obama's spending cuts, including ending the Iraq war." That's true, but Obama's proposed cuts are dwarfed by the Tax Policy Center's projected deficits. Obama's new spending programs might be completely offset by new revenue and spending cuts. But overall spending will still exceed overall revenue, and the nation would face at least 10 more years of annual deficits."

Source: http://www.newsweek.com/id/156246 You will find links in that Newsweek analysis to the Tax Policy Center's web site and lots of further analysis.
......

5) These fiscal concerns about McCain's and Obama's proposals seem to me to be real enough, and that is why I for one --- a non-partisan independent --- want to see more factual analysis by way of projections (a range of them) as the campaign unfolds in the next 9-10 weeks.

Do keep in mind, though, that national debt has risen $2.9 trillion under George W. Bush, with defense spending increases accounting for about $800 billion so far. It is only in the Clinton era that a combination of fast GDP growth, some raises in taxes at the start of the first Clinton era, and full employment in the last 3-4 years near 4.0% managed, taken together, to reduce the rapid increase in national debt that went back to the Ronald Reagan era of the 1980s.

......

Michael Gordon, AKA, the buggy professor

 
At 9/01/2008 6:10 PM, Anonymous Anonymous said...

That BLS black box Birth/Death model sure makes some purty numbas.

 
At 9/01/2008 11:47 PM, Blogger Robert said...

With regard to people's opinion of the economy I believe most are still suffering from a negative wealth effect brought on by excessive spending/borrowing during the Nasdaq bubble.

There really isn't any reason to be defensive about the good economic times of the 90s. Remember:

1. Before the collapse of the Berlin wall there were two paradigms. Capitalism vs Communism. After the collapse most countries adopted capitalism. This led to higher worldwide growth(we are seeing this now in commodities) and more demand for our products. Bill Clinton had nothing to do with this.

2. The Republican congress passed welfare reform and NAFTA. They also shut down the government to reduce spending. Bill Clinton had nothing to with this either.

3. The Republican congress passed a capital gains rate cut. This, combined with the aging baby boomer retirement money, and a game changer called the internet, led to a positive feedback loop in equities. This led to massive increase in revenue to the government. All the stock leaders of the 90s were formed during the Reagan Era by the way. Bill Clinton had nothing to do with this.

4. Bill Clinton slashed our defense(ie. peace dividend) and intelligence spending leading directly to 9/11 and the trillion dollar losses our economy had to swallow.

The bottom line is that you can't point to any domestic policy that Bill Clinton initiated that led to the growth of the 90s, but you can see that his horrible foreign policy choices led to a huge destruction of wealth we still haven't recovered from.

 
At 9/02/2008 6:29 AM, Anonymous Anonymous said...

"since when did increase military and national security expenditures cause the economy to be weaker?"

Believe it or not, sometimes that money can be spent on things better than missile shields, etc. Take a look at Ike and the interstate system and tell me that hasn't done more for the economy than all the Minuteman missiles sitting in silo's in North Dakota.

In any case, this election isn't about the economy; its about the Bush administration's failed foreign policy doctrine of pre-emption.

 
At 9/02/2008 6:36 AM, Anonymous Anonymous said...

Sowell says "Senator Obama has repeatedly tried to deal with national security threats with rhetoric. He tried to dismiss the threat of a nuclear Iran with because Iran is "a small nation"-- even though it is larger than Japan, which launched a devastating attack against the United States at Pearl Harbor. "

Um, unless Sowell is using land area here, Obama is correct. Japan has a population of 127 million versus Iran's 65 million, while Iran is about the size of Alaska and Japan about the size of California. I think population is probably the correct measure to be using.

 
At 9/02/2008 6:51 AM, Anonymous Anonymous said...

Sowell says: "These are the same kinds of liberal policies that led to double-digit inflation, double-digit interest rates and rising unemployment during the Carter administration"

So Nixon's wage and price controls had nothing to do with this? Wasn't inflation already in double-digits in 1974?

Didn't Volcker ultimately end the inflationary roller-coaster? Let's see, who hired Volcker? Carter. And who kept him? Reagan. And guess who has him as an adviser now? Obama.

 
At 9/02/2008 8:43 AM, Anonymous adam said...

HA! Very funny. How can someone inherit a economy with high unemployment (around 7%) and bring it down to 4% be compared to someone that inherits an economy with 4% unemployment and say they had the same average unemployment?

Wouldnt the numbers be distorted then to prove your point? Just looking at the graphs with an eye test shows the real story... sometimes numbers do not.

 
At 9/02/2008 8:58 AM, Blogger the buggy professor said...

The Tax Policy Center, a non-partisan group with tax specialists, put out a study on August 28, 2008, that compared the likely impact on national debt if either McCain's or Obama's tax cuts are implemented.

Their executive summary of their projected study concludes:

"Both candidates prefer to compare their plans to the “current policy” baseline, which would extend the 2001 and 2003 tax cuts and indefinitely extend an indexed AMT “patch”—and collect nearly $3.6 trillion less than under current law over the coming decade.

"Against that baseline, Obama would raise revenues by about $600 billion over the decade, while McCain would lose $600 billion.

"But choice of baseline doesn’t change how the proposals would affect the budget picture; without substantial cuts in government spending, both plans would sharply increase the national debt.

"Including interest costs, Obama’s tax plan would boost the debt by $3.5 trillion by 2018. McCain’s plan would increase the debt by $5 trillion.

"The Obama plan would reduce taxes for low- and moderate-income families, but raise them significantly for high-bracket taxpayers (see Figure 2). By 2012, middle-income taxpayers would see their after-tax income rise by about 5 percent, or nearly $2,200 annually. Those in the top 1 percent would face a $19,000 average tax increase—a 1.5 percent reduction in after-tax income.

"McCain would lift after-tax incomes an average of about 3 percent, or $1,400 annually, for middle-income taxpayers by 2012. But, in sharp contrast to Obama, he would cut taxes for those in the top 1% by more than $125,000, raising their after-tax income an average 9.5 percent.

"These projections are built on descriptions of the candidates’ plans provided by senior McCain and Obama staff (see Table 1). However, TPC has also projected costs based upon what candidates have actually said on the campaign trail, and those promises paint a quite different picture (see second panel of Summary Revenue Table)."

See: http://www.taxpolicycenter.org/UploadedPDF/411750_updated_candidates_summary.pdf

.....

Michael Gordon, AKA, the buggy professor

 
At 9/02/2008 1:08 PM, Blogger juandos said...

"Isn't it funny how the right thinks the media is leftist, and the left thinks the media is right wing?"...

Well what's funnier but also expected, the leftists are completely clueless...

 

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