But even though large swaths of the economy have shuttered with extraordinary speed, this economic downturn is likely to hit some people and places much harder than others. Those disparate effects, in turn, raise a question that is critical for politics as well as economics: In a country as large and diverse as the U.S., how do citizens know whether the economy is doing better or worse?
One obvious source of information is the news media. In fact, some political scientists have found that negative news coverage of the economy can shape public opinion, especially in an election year. Marc Hetherington, for instance, found that media coverage in the run-up to the 1992 presidential election was more negative than the economy warranted and cost incumbent President George H.W. Bush support. That could be particularly telling now, considering this is all happening just months ahead of a presidential election, and a strong economy has historically boosted the incumbent president’s chances of winning reelection.
But in a 2017 “Research & Politics” article, Eunji Kim, Soojong Kim and I found that the news media’s ability to influence Americans’ perceptions of the economy may be overstated. Our analysis found that major media outlets’ coverage of the economy is much more likely to lag public perceptions than to lead them. That means that the media coverage of an economic recession, like the one we seem to be headed toward, isn’t independently reshaping how Americans think the economy is doing. Instead, we found that media coverage often follows public opinion.
We used nearly 40 years of data from the University of Michigan’s surveys of consumers, a long-running survey that asks Americans their views of the economy, to create a monthly index of Americans’ level of concern about the economy.<a class="espn-footnote-link" data-footnote-id="1" href="https://fivethirtyeight.com/features/media-coverage-doesnt-actually-determine-public-opinion-on-the-economy/#fn-1" data-footnote-content="
Specifically, we looked at four questions the survey has asked consistently: 1) a question on respondents’ personal economic situation in the previous year; 2) a question on general business conditions in the previous year; 3) a question on respondents’ personal economic expectations in the coming year; 4) and a question on expectations about business conditions in the coming year.
“>1 We then compared that index to a measure of how 24 different media outlets covered the economy during that same time period, including big national newspapers like The New York Times and The Washington Post as well as regional papers like the Houston Chronicle.<a class="espn-footnote-link" data-footnote-id="2" href="https://fivethirtyeight.com/features/media-coverage-doesnt-actually-determine-public-opinion-on-the-economy/#fn-2" data-footnote-content="
The full list of media outlets is: ABC News (which owns FiveThirtyEight), the Arkansas Democrat-Gazette, the Atlanta Journal-Constitution, the Boston Globe, CBS News, the Chattanooga Times Free Press, the Chicago Sun-Times, Cleveland’s The Plain Dealer, The Columbus Dispatch, the Herald-Sun in Durham, North Carolina, the Minnesota Star Tribune, the New York Daily News, The New York Times, the Omaha World-Herald, The Oregonian, the Pittsburgh Post-Gazette, the San Diego Union-Tribune, the San Francisco Chronicle, the Seattle Post-Intelligencer, the Tampa Bay Times (known as the St. Petersburg Times through 2011), USA Today, The Virginian-Pilot, and The Washington Post.
“>2 Systematically measuring media outlets’ coverage in nearly half a million newspaper articles and television transcripts proved a bit more challenging. But similar to our approach with the economic survey data, we created an index, this time using words associated with positive or negative economies — words like “bear,” “drop,” “jobless,” and “layoff,” as well as “bull,” “growth,” and “invest”<a class="espn-footnote-link" data-footnote-id="3" href="https://fivethirtyeight.com/features/media-coverage-doesnt-actually-determine-public-opinion-on-the-economy/#fn-3" data-footnote-content="
Specifically, we created what is called an additive index, using 21 different keywords to determine both the frequency and tone of each outlet’s coverage. The resulting index tracks real-world economic indicators closely.
“>3 — to score the tone of economic stories published by these outlets.
And if we drill down into one of the most prominent media outlets we analyzed, The New York Times, we find no indication that media coverage is shaping public opinion. A telltale sign of media influence would have been if the tone of the Times’s economic coverage shifted before public perception does. But as you can see in the chart below, that didn’t really happen. Instead, the public’s perceptions of the economy more often seemed to lead news coverage rather than lag behind it. For instance, during key moments such as in the run-up to the Great Recession in 2008, the public grew more pessimistic well before the Times’s tone shifted.
In fact, this was the case across the 24 media outlets we analyzed. There were some outlets for which we found that the tone of media coverage consistently led public perceptions of the economy, but overall, we found no strong evidence that media coverage pushed Americans as a whole to perceive the economy in one way or the other.
Given how much attention politicians devote to the tone of media coverage, these results may seem surprising. But we’re actually not the only researchers to conclude that public perceptions aren’t heavily influenced by how the media frames the economy. H. Brandon Haller and Helmut Norpoth, for instance, found that citizens’ perceptions of the economy didn’t vary much based on their news consumption habits.
Still, other studies find evidence that the influence can run in both directions, with the tone of media coverage sometimes anticipating public perceptions. For example, Stuart Soroka, Dominik Stecula and Christopher Wlezien found that public perceptions can anticipate media coverage, but also that media coverage can actually lead public perceptions of how the economy has performed but not perceptions of how it will perform. After examining the tone of economic coverage in the four highest-circulation national newspapers, though, Amber Boydstun, Benjamin Highton, and Suzanna Linn conclude that media coverage can predict how Americans view the economy even after accounting for the state of the economy itself.
On two key points, then, academic research has been consistent: Public perceptions of the economy can get out ahead of media coverage, and public perceptions are also closely connected to actualeconomic conditions. This suggests that there are critical limits to the media’s influence on public perceptions, which is consistent with otherresearch thatshows the impact of elite opinion is often overstated.
In other words, when the economy shifts directions, the news media’s capacity to reshape public perceptions of the economy is limited at best. It’s easy to pick up a newspaper and assume that its writers and editors can shape public opinion, but that doesn’t seem to be true of the economy. Rather, the public reacts to real-world economic conditions, not media spin.
Staying Home Saves Lives. Could It Also Protect The Economy?
OTTAWA – Finance Minister Chrystia Freeland says the government is making some changes to mortgage rules to help more Canadians to purchase their first home.
She says the changes will come into force in December and better reflect the housing market.
The price cap for insured mortgages will be boosted for the first time since 2012, moving to $1.5 million from $1 million, to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
On Aug. 1 eligibility for the 30-year amortization was changed to include first-time buyers purchasing a newly-built home.
Justice Minister Arif Virani is also releasing drafts for a bill of rights for renters as well as one for homebuyers, both of which the government promised five months ago.
Virani says the government intends to work with provinces to prevent practices like renovictions, where landowners evict tenants and make minimal renovations and then seek higher rents.
The government touts today’s announced measures as the “boldest mortgage reforms in decades,” and it comes after a year of criticism over high housing costs.
The Liberals have been slumping in the polls for months, including among younger adults who say not being able to afford a house is one of their key concerns.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales rose 1.4 per cent to $71 billion in July, helped by higher sales in the petroleum and coal and chemical product subsectors.
The increase followed a 1.7 per cent decrease in June.
The agency says sales in the petroleum and coal product subsector gained 6.7 per cent to total $8.6 billion in July as most refineries sold more, helped by higher prices and demand.
Chemical product sales rose 5.3 per cent to $5.6 billion in July, boosted by increased sales of pharmaceutical and medicine products.
Sales of wood products fell 4.8 per cent for the month to $2.9 billion, the lowest level since May 2023.
In constant dollar terms, overall manufacturing sales rose 0.9 per cent in July.
This report by The Canadian Press was first published Sept. 16, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
