Just about the wackiest idea in circulation these days is the notion that the press is talking the country into a recession. The theory has a superficial appeal and also panders to the popular impulse to despise the media (that crude amalgam of newspapers, magazines and television). All the gloom-and-doom stories, the theory goes, create gloom and doom. Suitably scared, people cut spending, and the economy goes into the tank.
The theory is wonderfully simple -- and utterly wrong. For starters, it's not yet clear that we are in a recession or that consumer spending has collapsed. In the third quarter ending in September, the gross national product rose a bit, and consumer spending grew respectably (a 3.6 percent annual rate). But these facts are mere quibbles. The theory's fatal flaw is that it wildly exaggerates media power.
Think about it. Did the media cause mass overconstruction of office buildings that has left a 19.5 percent national vacancy rate? Did the media raise crude-oil prices from $17 a barrel in July to $28 to $40 now (depending on the day)? Did the media increase inflation from 4.4 percent in 1987 to about 6 percent now? Did the media force the Federal Reserve to raise interest rates in 1988 and 1989 to choke inflation? Did the media reduce corporate profits 14 percent since late 1988? These are real problems that have nothing to do with media-induced blues.
Consumer confidence is now dropping, and the decline could foreshadow actual decreases in consumer spending. In October, for example, the confidence index of The Conference Board, a research group, fell 24 points to 61, the lowest point since 1982. But scare stories in the media didn't cause this slide. People react to what they experience and see, mainly prices and job prospects. Both inflation and unemployment have been rising. The October jobless rate was 5.7 percent, up from a low of 5.2 in June.
To exonerate the media from destroying the economy is not to say that economic journalism is flawless. Hey, we're guilty of many oft-alleged sins.
Sin Number One: We sensationalize and have a bad-news bias. Writer Gregg Easterbrook recently had a hilarious essay in The New Republic -- titled "The Sky Is Always Falling" -- in which he mercilessly documented how print journalism finds fault with even favorable economic trends. But print people are tame compared with their TV counterparts. CBS News last week virtually declared a recession and labeled a week-long series "Bad Times." Correspondent Ray Brady had an especially misleading report on the "hidden homeless": people who aren't homeless but who live, often comfortably, with relatives. Having invented a new category of homeless, he then compared today's situation with the 1930s (a decade when unemployment averaged 18 percent).
Sin Number Two: We practice pack journalism. The latest fad is white-collar unemployment. How safe is your job? asked last week's Newsweek cover story. On Oct. 4, The Wall Street Journal had a front-page story, white collar blues. There were similar stories in USA Today on Oct. 18 and in The Washington Post on Oct. 19. The New York Times was late on Oct. 29. Even yours truly imitates; for example, there have already been stories on the "media recession."
Sin Number Three: We project our experience onto the rest of the world. "The Northeast is the megaphone of the country," as Newsweek's economics correspondent Rich Thomas recently explained in a speech. "It's where our headquarters is, and it's where . . . the networks are. So they're screaming bloody murder because Boston and New York are in a recession."
The combination of these sins may seem to cinch the case against the media. En masse, we preach pessimism. The case won't take. Readers and viewers just don't treat us that seriously. They respond mostly to their own situations and tend to discount our constant carping. Remember the stock-market crash in 1987? That triggered a loud roar of media gloom and doom. "Consumers mostly dismissed it," says economist Richard Curtin, who runs the University of Michigan's monthly survey of consumer confidence.
What affects personal and business spending decisions -- which cause the economy to expand or contract -- is far more complex than CBS's latest pronouncement. The economy generates its own rhythms. There are profit opportunities that, seized with too much enthusiasm, can lead to overinvestment. Slumps sometimes result, when spending subsequently drops. But in a slump, the economy has recuperative powers. It adjusts. Lower interest rates may spur housing. Higher unemployment -- or fear of unemployment -- may cut wage increases and inflation. Government policies and outside events, such as the Persian Gulf crisis, also obviously matter.
The Gulf crisis makes forecasts extra chancy, but most economists now expect a mild recession. (A recession usually means at least half a year of declining output.) To economist Curtin, the recent drop in consumer confidence resembles other prerecessionary periods, although he doesn't find consumers "in a panic." On average, the 52 economists polled by Blue Chip Economic Indicators, a newsletter, think unemployment in 1991 will slightly exceed 6 percent.
Should a recession occur, one task of journalists will be to keep it in perspective: neither to minimize nor exaggerate the problems. It won't be easy. Sometimes we will be defeated by the contradictory nature of what we do. We're trying to grab people's attention -- to tell them something new and different -- and, at the same time, to present an accurate picture of reality, which is often old and dull. But sometimes we will be defeated by the inherent difficulty of making instant judgments about events whose significance won't yet be clear.
If blaming the economy's problems on the press makes people feel better, let them do it. It's a cheap form of do-it-yourself therapy. But they should also take comfort from the reality that the media don't move the GNP. If we did, the country would never recover from any recession. Our increasingly glum stories would poison public opinion and paralyze the economy. Thank heaven, we're not so powerful.