Apocalypse Dow
Just about every day the headlines across the national media range from grim to utterly frightening. Today being no exception.
Swift, Steep Downturn Crosses Globe and Automakers Seek $14 Billion More in Aid and Florida Court Blasts Through Foreclosure Cases and No One Can Escape the Crisis.
As someone who has written many a front-page headline, I know not to underestimate the power publications have in setting a tone. At what point does the steady drip — or the full fire-hosing, as the case may be — become torture? And more importantly, does the flood of doom-laden headlines itself deepen the economic crisis? Obviously the role of reporters and editors is to cover what’s going on in the world to the best of their knowledge and belief. No doubt the current economic reality is ugly. But the public mood matters, not least because so much of U.S. economic activity is based on consumer spending.
I’m working on a related magazine article right now and have been looking into how the media’s influence on the economy can be measured. According to a study published in 2004 from the Federal Reserve Bank of San Francisco, media coverage does have an impact — and sometimes can even serve to unhinge sentiment from reality:
In addition to moving in line with [data on] economic fundamentals, consumer sentiment also swings in response to the tone and volume of economic reporting by the media. Over the past 25 years, there have been several periods when the tone and volume of economic reporting pushed consumer sentiment significantly away from what economic fundamentals would suggest.
In an article published in Political Research Quarterly, economists concluded: “Consistent with previous research, we find that, overall, the media tend to follow negative economic conditions more closely than positive economic conditions.” And those findings were published back in 1995, when media ubiquity and consumption was a sliver of what it is today.
To its credit, National Public Radio’s “Morning Edition” tried in earnest on Tuesday to buck the trend, tracking down a relatively upbeat economic story in Youngstown, Ohio. (A thriving bit of technology entrepreneurship in the Rust Belt, of all places!)
Until it soon returned to the horror show: Zombie Banks Feed Off Bailout Money.
Mark Follman 
I find your article extremely upsetting…In response, I’ve just pulled all of my money out of the banking system and walked away from my home loan.
Well, mark, I was listening to radio reports of continuing decline in stock prices this morning and it was to me rather like hearing reports indicating that we know is happening is indeed still happening, like we’re on a toboggan and we know we’re on a toboggan and we know the toboggan is going downhill really fast but we’ve been on it now for weeks or months and so the reporting on the fact that we’re going downhill really fast seemed a little superfluous, like news that it’s still raining. We’ll be going downhill really fast until we come to a stop. When we come to a stop we might be farther down the hill than we’ve never been before. It might look different. But I do note that the continuing reporting on what we already know is happening, because it is a fairly drawn-out phenomenon and not a one-time deal, may well have a cumulative effect. I wish people were more thoughtful. I wish people could be more aware of what the daily messages on the radio are doing to them. Other than that, I don’t have anything really smart to say about this. Glad you’re doing the blog is all. Oh–one other thing, I guess: How I came up, I thought writers were always poor and unemployed. It gave me a shitty attitude, but also prepared me for stuff like this. This feels somehow normal to a guy with basically apocalyptic expectations.
Thanks for your thoughts, Cary. Yeah, it’s that potential cumulative effect that’s been on my mind. I do wonder if we as ever-more-plugged-in media consumers fully grasp how psychologically soggy this all might be making us. There are obvious reasons for why the media will keep reporting about how hard it’s raining, day after day. Maybe the more plugged in we are, then, the more discerning we need to be in terms of how we absorb information in a time of serious crisis.
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