It’s no surprise that the Obama administration and the Democrats in Congress are trying to claim that the recession (which they blame on Bush and Cheney) is over and that the economy is slowly returning to health thanks to their efforts at economic stimulus. At least those highly dubious claims get challenged by Republicans, who can be relied on to counter with evidence to the contrary, and to claim (with equal self-serving deception) that the economy is in a slump thanks to Democratic policies.
The problem comes when the media, which are supposed to take a skeptical stance, start playing economic cheerleaders, and providing the public with false information and false hopes.
This has come to be pretty much the norm these days. Those who warn that the underpinnings of the US economy are eroded, and that there is really nothing left to drive a recovery, or who warn that there is a serious danger of a slide into an even deeper recession or even a depression, are written off as “doomsayers,” and given little credence or ink, while the slightest sign of something positive gets hailed as evidence that things are on the mend.
Take the news of the past two weeks, where we had first a report from an obscure private trade group that its manufacturing index had for the first time in ages shown a slight uptic. This was hailed in the financial and general media as almost the Second Coming, with nobody mentioning that manufacturing these days represents only a tiny part of the US economy, down to just 12%. Furthermore, it went largely unreported that at the same time that the index rose a bit, employment in the manufacturing sector actually fell by close to 30,000 jobs–not an indication that any improvement in sales of manufactured goods was going to do much to improve the rest of the economy.
Later, we had back-to-back government reports that the number of weekly new unemployment claims had fallen from the prior several months’ level and that the nation’s trade deficit had improved slightly, to “just” negative $43 billion. The problem with this supposedly good information was that the “lower” new unemployment claim filing figure 451,000 is still a hell of a big number, and that the deficit had fallen from a record level set in June of $49 billion . Again, a negative trade figure of $43 billion is a whopping monthly deficit, especially when you consider that strapped Americans are not buying much these days (multiplied by 12 it would be more than half a trillion dollars for the year!).
But here’s what the Associated Press (the news outfit that is now the main purveyor of such news to the American people via their reporter-depleted local papers and TV news programs) had to say, in its September 9 report (by economics writers Martin Crutsinger and Jeannine Aversa) on the new numbers:
“No, the economy isn’t roaring ahead. And no, companies aren’t making lots of job offers. But a fresh batch of economic data Thursday at least eased summertime fears that the economy might be on the brink of another recession.”
The AP article went on to cite what it called “other recent data” supporting “the notion that the economy, while growing only fitfully, is at least not in danger of stalling.”
Among the other data cited in support of this soothing claim were increased hiring by private sector firms, which added some 67,000 employees, that the stock market had staged a small rally in early September, posting six days of gains in seven days of trading, that gas prices had stayed low, and that shoppers had flooded the malls in August.
Each of these supposedly heartening bits of news supporting the claim that the economy was on the move are, in fact, problematic, however.
The new private sector jobs come to only half the number needed just to employ the 125,000 new workers who join the labor market each month, which means that the unemployment rate is actually going up, as indeed it did in August, from 9.5% to 9.6%. Furthermore, even as some private firms hire employees (mostly temps, by the way, which is not a sign of confidence on managers’ part), the public sector is laying people off in droves as government stimulus money runs out.
That supposed stock market “boomlet” petered out almost as soon as it happened, and you have to look far and wide to find a stock analyst who thinks that equities are going to go anywhere soon. Besides, August and early September stock trading is notoriously thin, and hardly reflects general investor sentiment (for what that is worth in any case).
As for gas prices, the reason they are low is that people aren’t driving as much, and the oil companies are now stuck with big supplies of gasoline in their tank farms as a consequence. Low prices are hardly a sign of economic vigor, which is why oil prices dip when economic news is bad, and rise when economic news is good.
Finally, about that surge of consumers into the malls. That was the result not of consumers finally feeling like partying, but of massive discounting and sales by the stores, which are desperate to move summer merchandise out in time for the fall and Christmas season. If anything, this was a sign of the deflationary environment that has economists in the government shuddering (deflation is a tough problem because once it catches hold, consumers, who account for 72% of US economic activity such as it is, start putting off spending hoping that prices will fall ever lower, a process that can feed on itself).
Left unsaid amid the AP economic puffery was that housing prices are continuing to fall and that foreclosures are actually rising. Since no recession since World War II has ended without housing prices first starting an upswing (real estate is the major asset of most middle-class Americans and right now they are feeling the loss of over $8 trillion in property values), it is almost inconceivable that we could see an economic recovery anytime soon.
With the real unemployment rate now at close to 17% (that’s the official unemployment rate of 9.6% plus those who are only working part-time but who are seeking full-time work), and actually above 20% (when those who have given up looking and are no longer counted as being in the labor market are added in), and with personal wealth way down, there is simply no growth engine, outside of the federal government, that could kick-start this struggling economy. And the federal government, in thrall to Wall Street, isn’t about to do any kick-starting.
Add to that the fact that the economies in most of the rest of the world, even including China and India, are sputtering, and you have a pretty grim picture for the US economy and for the broad public, which is feeling increasingly stressed and even desperate.
But that’s not what Americans are hearing from their newsmedia.
Most people get it though. That’s why the Democrats appear headed for disaster in November. People understand from their own lives and from those around them that things are not getting better, and that the Obama administration and the Democratic Congress are not helping. Forget a “double-dip” recession, which even many mainstream economists say has a 25-30% chance of occurring! According to a poll by Strategy One Insight, 92% of Americans think we’re still in the recession that began officially in the middle of 2007.
And no wonder! Even though this is the unquestionably worst economic crisis since the Great Depression of the 1930s, there has been no public jobs program, the timid program that was supposed to keep people from losing their homes has been a joke, the numbers of people living on the street or moving in with other family members are both soaring, the number of people living below the poverty line is at a record, small investors are pulling their money out of the stock market in droves, and by the way, unlike the Great Depression, which many economists think only really ended when the US began preparing to mobilize for World War II, this time around we’re already at war, and it’s not helping things at all. In fact, since our current wars are all being funded on credit, they’re actually making things worse, by preventing the government from spending on productive things like education, infrastructure, alternative energy, etc.
So don’t rely on the corporate newsmedia to figure out what’s going on with this economy. Just check out the skimpy want ads, or visit a food bank.
As for AP, the news service ought to change its letters to PR.