Media and Conflict
The existence of a pro-business, pro-government bias led to ineffectual journalistic coverage of U.S. unemployment during the period leading up to the 2008-2009 recession. In what has come to be known as the Great Recession because of its comparability to the Great Depression, the U.S. unemployment rate reached historic highs. The magnitude of the recession was such that economists and policy-makers should have been better prepared to manage the looming crisis, but instead were caught unawares because they relied on self-serving forecasts that minimized unemployment forecasts. The news media was complicit in its minimalist coverage of the unrealistic projections that the Bush White House and administration served up.
In that context, and given the far-reaching effects on U.S. economy, the abbreviated reports of unemployment forecasts deserve closer scrutiny. This paper explores reasons the news media rarely challenged the consistently inaccurate unemployment forecasting, projections that should have informed policy decisions and warned the country that the U.S. was entering one of the worst employment crises in its history. In spite of the magnitude of the economic decline that would see tens of millions of Americans unemployed, there was little media coverage regarding forecast accuracy.
The few economists who actually forecast the timing, duration. And severity of the downturn as early as 2005 and 2006 were accorded scant attention. Instead, the news media reported more optimistic projections, offering markedly lower unemployment figures, which circumstance only changed well after the recession had taken hold. What factors created such gullibility on the part of the media? This essay explores possible explanations and examines the implications of those criticisms.
Description and Overview
The U.S. unemployment rate peaked in October 2009 at 10.1%, with more than 15 million people out of work ("U.S. Unemployment"). In reality, the number of unemployed was significantly higher if one included "marginally affected" and part-time workers, those who gave up looking for work or who wanted full-time jobs but could find only part-time work. The revised number totaled to an unemployment rate of 16.3% in July 2009. During the same period, the number of people who had given up on finding work rose to 796,000 (Bandyk). From December 2007 to June 2009, the period officially designated as the recession, the American economy shed more that 5% of its nonfarm payroll jobs (Rampell).
And yet, just 16 months earlier, the Federal Reserve was predicting that the unemployment rate in 2009 would be between 5.2% and 5.7%. Moreover, these figures were revised from an earlier projection that was even more inaccurate, 5% to 5.3%. According to Standard and Poor's chief economist David Wyss "They're not looking for a deep recession" (Isidore).
Furthermore, the Fed indicated that it was expecting the economy to grow in 2009. Nowhere in his analysis does the CNN journalist discuss the possibility of a different, more pessimistic forecast provided by other experts. Instead, he presented the forecast that Ben Bernanke and the Federal Reserve offered, never questioning their accuracy (Isidore).
Likewise, President Bush's Council of Economic Advisors offered similarly misguided counsel in February 2008. The administration's top advisors not only projected an annual unemployment rate of just below 5% through 2013, they also predicted that the economy would continue to grow and avoid a recession. During the White House ceremony that accompanied the report's release, Bush repeated his earlier contention that the economy was sound ("White House"). In fact, as it turned out, the nation had already entered into recession.
Even as the year progressed and more economic indicators pointed to a recession, economists and many in the media saw a rosier version of reality than was justified by the facts. In November 2008, CNN Money magazine quoted economists who predicted that the unemployment rate would max out at 7% or 8% by the end of 2009 (Rosato).
At the same time that the Federal Reserve and Bush administration economists' forecasting was so significantly inaccurate, other economists with different views received almost no media attention. Why was the media so willing to ignore economists like Nouriel Roubin, the New York University professor who predicted the upcoming recession in a September 2006 speech to the International Monetary Fund? Why did the media give no credence to Peter Schiff, president of Euro Pacific Capital, who predicted in August 2007, a "depressionary environment" for the year 2009? (The Motley Fool). From 2005 through 2007, various economists predicted the housing decline, the length and depth of the recession, the worsening financial markets, and the increase in unemployment. Yet journalists never asked the obvious question: why such...
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