Journalists worked themselves into a fright this spring as inflation rose, scaremongering with cries of “stagflation” and “recession.” But when the news came last week that the inflation “monster” wasn’t “rearing its ugly head,” the media could only whisper.
“I just tend to think that inflation is not something that has been kicked yet,” said CNN’s Allen Wastler on the August 19 “In the Money.” “It’s one of those monsters, you want to stay out in front of it. The moment it’s past you – boom, you’re dead.”
Back on May 23, when inflation was rising, NBC’s Anne Thompson imagined a stock market crash because of one report that said there were “similarities between today’s environment and the environment before the crash of 1987.”
But when October came, inflation suddenly didn’t look like such a horrific threat. And the networks gave it only slight mentions – unlike the many lengthy reports warning about economic collapse throughout the year.
Wholesale core inflation dropped a record amount in October, and consumer core inflation had the smallest increase in eight months. Core inflation is generally accepted as a measure of long-term inflation, because it strips out energy and food prices, which are the most volatile. The media, however, have focused instead on those volatile energy prices as their measure of the economy for much of 2006.
“NBC Nightly News” and ABC “World News” both reported the “record decline” in wholesale prices on November 14. But the networks kept it short and sweet at 161 words and 74 words respectively. “CBS Evening News” had no report at all.
The nearly one-percent drop in wholesale core inflation, announced by the Labor Department on November 14, was “the biggest one-month fall in 13 years,” the Associated Press reported.
Similarly, on November 16 as the Labor Department said that consumer pricing core inflation had the smallest monthly increase in eight months, it received only two very brief mentions: once during the November 16 “CBS Evening News” and during CBS’s “Early Show” the next day.
Anchor Katie Couric again focused on gas prices on the “Evening News,” saying “cheaper gasoline has us talking about deflation instead of inflation for a second straight month.”
But in each of these recent reports there were no experts, no predictions, just a quick mention of the inflationary data. That stands in sharp contrast to media accounts as inflation climbed.
Calamity is Coming!
Back on May 17, all three networks covered a stock market drop and rising inflation. “NBC Nightly News” made room for a 446-word report, “CBS Evening News” a 423-word segment, and ABC “World News Tonight” had a 581-word story.
NBC’s Anne Thompson worried about an economic collapse on the May 23 “Today Show.”
“Could it be something more?,” Thompson asked, “A report from Barclay’s Capital sees similarities between today’s environment and the environment before the crash of 1987, including increasing inflation, a slowing housing market, a growing U.S. current accounts deficit and a new man at the head of the Federal Reserve.”
New Fortune Magazine editor and CNN “In the Money” regular Andy Serwer drew comparisons to a different economic problem: stagflation. Serwer suggested on the June 15 “American Morning” that the inflation rate of 3.8 percent raised “the specter of stagflation,” which is stagnant economic growth coupled with inflation.
Serwer brought it up again just days later on the June 17 “In the Money.” “We’re starting to hear a real ugly, scary word on Wall Street being bandied about, and that’s stagflation,” said Serwer.
Stagflation was a buzzword in the economically troubled 1970s, when conditions were far different, as economist Larry Kudlow reminded readers in a May 2, 2005, column.
“If you listen too hard to pessimistic pundits you can get all lathered up over the risks of stagflation – slower growth and higher prices. Don’t go there,” Kudlow wrote. “This is not the 1970s. Money is sounder, tax rates are lower, productivity and profits are much higher, and world trade is more open.”
But the media have hyped inflation, including comparisons to the ’70s, for two years, as the Business & Media Institute has documented. Reports were filled with fear – fear of what inflation would do and fear of what the Fed would do about inflation.
CBS “Morning News” anchor Susan McGinnis reported on May 18 that “inflation is once again rearing its ugly head.”
Business correspondent Anthony Mason feared price increases. “It’s back: inflation. For the third straight month, prices are on the rise. Clothing prices are up. So are health care costs. But the biggest increase last month was in the cost of renting a home, because rising mortgage rates are making it more expensive to buy a home,” Mason said on the June 15 “CBS Morning News.”
On the other hand, ABC’s Betsy Stark was afraid of the Fed.
“The message of the market today is that investors have gone from optimism that the Fed can pull that off, to fear that it may not,” Stark said on “World News Tonight” May 17.
And on June 7, Stark was even more concerned, suggesting that Fed interest rate hikes could “send the economy into recession.”
CNN’s Allen Wastler went further on August 19, predicting inflation’s return. “I’ll be the inflation hawk here. Inflation’s not dead. It’s percolating out there. It’s going to jump back out … He’s gonna to have to raise the rate again,” he said on “In the Money.” Wastler called inflation a “monster” and predicted rates would be raised before the November elections.
That was just another in a long line of media predictions that didn’t pan out. Interest rates have been steady since June. Meanwhile, the media downplayed many other positive economic signs: gas prices fell from summer highs; unemployment is 4.4 percent; and the United States has seen 38 straight months of job creation.
Despite all of that, the networks continually reported bad economic news as if there was no good news. But on the October 5 “Today” show, Meredith Vieira admitted how very wrong the media were about inflation.
“I want to go back to June … conventional wisdom was that we were headed toward tough economic times with rising oil prices and inflation,” said Vieira.
Vieira’s guest, Dylan Ratigan of CNBC’s “Fast Money” agreed with her saying, “we were supposed to see inflation spiraling potentially out of control.”
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If Inflation Falls in the Forest …
