3/31/2008

New Op-ed up at Fox News: The 'Recession' Is a Media Myth

My new op-ed can be found here:

During the 2000 election, with Bill Clinton as president, the economy was viewed through rose-colored glasses. According to polls, voters didn’t realize that the country was in a recession. Although the economy started shrinking in July 2000, most Americans through the entire year thought that the economy was fine.

But over the last half-year, the media and politicians have said we were in a recession even while the economy was still growing.

Gas prices are going up. The economy is slowing. Talk of recession is seemingly everywhere. While the majority of people rate their personal finances positively, consumer confidence in the economy has plunged to a 16-year low, well below what it was during the last year of the Clinton administration when we were in a recession.

A Nexis search on news stories during the three-month period from July 2000 through September 2000 using the keywords “economy recession US” produces 1,388. By contrast, the same search over just the last month finds 3,166. Or, even more telling, take the three months from July through September last year, when the GDP was growing at a phenomenal 4.9 percent. The same type of Google search shows 2,475 news stories. . . .

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15 Comments:

Anonymous Brian V. said...

I can't agree with you, John. Even without the MSM slanting the coverage, the increased amount of money I spend each month on gas and sundries points to something being askew. The rising cost of diesel fuel is driving up the cost of every tangible thing an American can buy.

It may not meet the "2 consecutive quarters" definition of a recession, but there's a serious pinch being put on us, nonetheless.

3/31/2008 4:33 PM  
Blogger John Lott said...

Dear Brian:

Gas is up, but enough other prices are falling or staying the same that the overall inflation rate is still pretty low. As far as your pocketbook goes, it is the overall change in the price level that most concerns you.

3/31/2008 4:48 PM  
Anonymous Anonymous said...

Comparison of the unemployment figures between the Clinton and Bush administrations are unsound for obvious reasons. For example, backers of the current administration quote poverty numbers saying that the percentage of impoverished under Bush is practically identical to that of Clinton. What they fail to mention is that Clinton was able to reduce the rate while under Bush the percentage has risen.

4/01/2008 12:31 AM  
Blogger Weaver said...

Emancipation age children account for about 13,568,057 of this century’s population growth, when subtracting the population losses (CDC deaths). The Civilian noninstitutional population has grown by 23,784,000 persons this Century, while employment has grown by only 11,767,656.

4/01/2008 1:08 AM  
Blogger John Lott said...

Dear Anonymous:

My work with Hassett takes into account not only the level but whether things are getting better or worse (I think that the piece is pretty clear on that point).

Dear Weaver:

There is no shortage of jobs. It is pretty silly to assume that everyone should have a job or indeed wants to have a job. For example, the child birth rate has gone up and more women are staying at home. The point is that the very low unemployment rate means that people can easily get jobs if they want to get them.

4/01/2008 2:30 AM  
Blogger Joe said...

Dr. Lott;

I can't express how much I appreciate the common sense analysis you provided in this column. I spend a lot of my day being optimistic about things, especially my income, which has risen dramatically in the last couple of years due to sacrifice and hard work. Yes, gas is expensive, and no doubt other prices will rise due to the higher costs of transportation. When these things happen, you adjust.

I refuse to see the bleak picture of our economy that's currently being painted by the general media and sucked in by an ignorant public.

Out of curiosity, I wondered about something. In your research of employment statistics, do you place a lot of weight in some of the recent trends in "self-employment" brought on by technology (i.e., more independent contractors, people who run eBay businesses from home, etc.)? I often wonder if this is an area of "employment" that tends to be statistically ignored by analysts.

Thanks.

4/01/2008 9:13 AM  
Anonymous Anonymous said...

Sorry, still think that GDP has to indexed to common prices, like a big mac, or starbucks cup of coffee. If indexing GDP to these real prices occurs, we've been in recession for 5 quarters. That's real money, not dollars. And we've enjoyed persistent inflation over 2% for the last two years. Do the math on your own; avoid these calculations based on a "bushel of corn".

4/01/2008 12:06 PM  
Anonymous Jennifer said...

Thanks for bringing this up! I remember telling my husband (right after Bush won his 2nd term) that the economy would be in a "recession" in 2008. He asked me why and I told him "Because the media is liberal and biased towards the Democrats and will want to do all they can to help one get into the White House. There won't actually be a recession - the media will just tell everyone there is!"

Well, almost 4 years later, I was right.

I would even dare say that if a Democrat gets into the White House I bet we see some amazing turnaround in our economy. :) POOF - the recession will suddenly disappear off the front pages of liberal newspapers.

4/01/2008 12:07 PM  
Blogger John Lott said...

Dear Anonymous:

"indexed to common prices," but that is exactly what the Consumer Price Index does do. I don't understand your point.

Dear Joe and Jennifer:

Thanks very much for your comments and for reading the piece.

4/01/2008 1:18 PM  
Anonymous Anonymous said...

Mr. Lott,

You said in a response to a previous post that the direction (whether things were getting better or worse) under both Clinton and Bush administrations was made clear in the article. Could you please point specifically to where you make that clear when it comes to unemployment? Cite something in the article that makes that clear please because I just don't see it. Thanks.

4/01/2008 2:25 PM  
Anonymous Anonymous said...

So maybe technically it’s not a recession because there has not been two consecutive quarters of negative growth.

I don't truly think the economy is in such a bad shape as they say, but to dismiss all arguments by blaming it on the "liberal" media is ridiculous. There is some truth to these comments.

But to interpret the last eight years as good for the economy is a far strech, when was the last time you saw a country go to war, and offer tax cuts at the same time?

4/01/2008 3:41 PM  
Anonymous Bill Simon said...

John,

To be blunt, I don't believe the old "metrics" of determining a recession or inflation works in today's economy. Have you seen the price of eggs? The price for a movie at a matinee time slot? ($8.00 for an adult in Marietta, Ga, by the way). The price of fruit?

John, you are brilliant at glossing over (or, flat-out ignoring) the impact of the micro-inflationary pressures on the cost of goods and services that every-day Joe, Frank, Sam, and Bobby-Sue have to contend with.

Whether or not we are "in" a measurable economic recession is irrelevant. A significant number of people are hurting, and I believe it will continue as long as "wealth-creating opportunities" are stymied by a heavy tax burden (Federal + State Sales Tax + County + SPLOST + Property Ad Valorem Tax)
due to...NOT the way taxes are "collected" (which is the only thing proposals like the Fair Tax will change), but the fact that government just keeps on demanding more and more of our money.

You stated to Brian (his was the 1st comment) that "Gas is up, but enough other prices are falling or staying the same that the overall inflation rate is still pretty low."

John, you and the other economists are looking only at "shelf prices" for things. You ignore the sales taxes and other fees applied to those shelf prices...THOSE are the burdens everyday Americans face having to pay. It is those marginal costs that kill us in the wallet, and make us avoid spending money to feed the little government piggies.

There is nothing more destructive to wealth-creation than the burden government exacts on the population. NOTHING

4/01/2008 5:35 PM  
Anonymous Anonymous said...

If the recession is just a media gimick then why is the government going to give us a stimulus payment? Why has the Fed been slashing rates, sometimes in emergency meetings? How come year over year auto sales tanked? Why do I go to sleep on Friday with Bear Stearns at 30 and wake up on Monday to find they've been sold for only $2? Three years ago a house in my neighborhood sold for $450,000. That same house went on the market again a year ago at $450,000 and is now down to $379,000 and hasn't sold yet. Sure we are not technically in a recession (2 quarters of negative GDP) but I think the negative reporting has been justified. If anything your article could be viewed as slanted in the opposite direction. What's with the bogus Nexis figures? Don't you think that this has more to do with the fact that there are many more websites now than in 2000? Then you go on to compare a Google search to a Nexis search to site your 78% increase. You're not comparing Apples to Apples John.

4/01/2008 6:02 PM  
Blogger Chris said...

The quote about Clinton's average unemployment vs. Bush's is disingenuous.

Clinton's "average" is slightly higher because he started with a high rate of unemployment that he inherited from the elder Bush.

Every year under Clinton, unemployment went down. W. Bush can't say the same.

Do you have contempt for your readers? Obviously you are smart enough to know why that statistic is totally misleading.

4/01/2008 11:24 PM  
Anonymous Anonymous said...

The CPI does NOT index to common prices, it indexes to a "basket" of market goods. It is so very very outdated. CPI needs to modernize, and index to things that actual people know the value of. Less bushels of wheat more 12 packs of coke.

4/02/2008 8:13 AM  

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