CBS Conjures Recession Specter in New Years Newscast

     Shes no Miss Cleo, but CBSs Sharyn Alfonsi polished off her crystal ball to issue a cloudy economic picture for 2006 on the New Years Day edition of the "CBS Evening News". A broad consensus of economists consulted by The Wall Street Journal and Reuters, however, predict another strong year for the U.S. economy, with lower inflation and strong growth in Gross Domestic Product (GDP).

     Introducing her January 1 report, the CBS correspondent began with an anecdote about how 19th century financier J.P. Morgan once wisely remarked that the stock market would fluctuate when he was asked to predict its future. Alfonsi segued to her videotaped report grimly warning, thats about the only guarantee this year. With big business struggling, unsteady interest rates, and signs of a recession, the best some forecasters are hoping for in 2006 is an average year.

     Yet the Wall Street Journal found consensus among 56 economists for continued growth in the American economy in 2006, while the wire service Reuters reported similar agreement among the 100 economists it queried.

     The consensus forecast of 56 economists surveyed by The Wall Street Journal is that the nation's gross domestic product the broadest measure of economic output will grow at an annual rate of 3.5% in the first half of 2006 and 3.1% in the second half, reported Rafael Gerena-Morales and Tim Annett in the January 3 paper. On December 30, Reuters correspondent Natalie Harrison noted GDP growth for the United States was estimated at 3.6 percent this year and 3.4 percent in 2006.

     Not only is the U.S. economy expected to grow at a historically strong clip, inflation is expected to be lower than in 2005. [T]he consensus forecast calls for the CPI to rise 3.1% in the 12 months through May 2006 and 2.3% in the 12 months through November 2006, reported the Journal about the Consumer Price Index.

     Pessimistic prognostications were few and far between, as the Journal added that only four economists cited inflation as this year's biggest economic risk while only one, Ian Shepherdson at High Frequency Economics expects the expansion to end anytime soon.

     Reuters surveyed 100 economists for predictions of what 2006 has in store for the U.S., Japan, Britain, and Europe. The British wire service reported on December 30 that the United States is still expected to record the strongest growth among those major world economies, despite an expected slowdown in consumer spending and lower but still expensive oil, as reconstruction efforts post-Hurricane Katrina help to boost productivity.

     In addition to economic forecasting running counter to Alfonsis claims, the CBS reporter herself dismissed the strongest evidence she could muster of a possible recession on the horizon, an inverted yield curve on Treasury bond interest rates. After tossing in a skeptical sound bite by stock market strategist Bill OGrady, Alfonsi closed her report with a joke about the track record of previous recession predictions: dont panic yet, as one financial guru pointed out, economists have successfully predicted 11 of the last six recessions. Its still early.

     Its still early 2006, but it doesnt look promising that reporters like Alfonsi will give up last years negative biases for the new year. For more on how the media have consistently portrayed the U.S. economy as hopeless and on the brink of recession, read The Business & Media Institutes year-ending study, The Medias Top Ten Economic Myths of 2005.