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Is Economic Pessimism the Media’s Fault?

Is Economic Pessimism the Media’s Fault?
Is Economic Pessimism the Media’s Fault?

The jobs report released last October was a thing of beauty. Over the previous month, the U.S. economy had added 336,000 jobs. It was one of the largest gains of the year and nearly double the amount that most analysts had expected—the kind of numbers that traditionally might occasion some celebratory champagne-popping. Here’s how the press covered it: “Jobs Gains Surge, Troubling News for the Federal Reserve,” read a New York Times headline. “Don’t Get Too Comfortable With a Good Job Market,” warned The Wall Street Journal. “September Jobs Report May Be Last Good One Before Sharp Slowdown,” according to Bloomberg.

Journalists have long gravitated toward calling out problems rather than highlighting feel-good stories. Exposing wrongdoing and injustice is, after all, part of the job description. (More cynical readers will point out that audiences have long rewarded the press for doomerism.) But according to new research from the Brookings Institution, when it comes to economic news, this proclivity for negativity has lately gotten even more pronounced. For the study, the economists Ben Harris and Aaron Sojourner compared an index of the “sentiment” of economic coverage in a set of mainstream newspapers with what is actually happening in the economy. They found that, from 1988 to 2016, changes in the two tracked closely together: The sentiment of economic stories tended to become more positive when measures such as inflation, employment, and the stock market were looking good, and more negative when they were looking bad. At the beginning of Donald Trump’s presidency, however, the relationship began to break down; coverage became more negative than the economic fundamentals would predict. After Joe Biden took office, the gulf widened even more. In an email, Harris and Sojourner told me that they found that from 2017 to 2023, the media’s “negativity gap” was nearly five times larger than it was during the previous three decades.

This shift may help explain why the American public has been so down on an economy that by most measures is incredibly healthy. Some of that clearly stems from the fact that prices remain well above their pre-pandemic levels, even as the rate of inflation has gotten back under control. But a purely economic analysis can’t fully explain the disconnect. For one, many Americans appear misinformed about what’s actually happening in the economy. In a recent survey, six in 10 respondents said they felt that the U.S. economy was in a recession (it isn’t); in another, 90 percent said that prices have risen faster than wages this year (they haven’t). People’s feelings about the national economy also appear disconnected from their own experience of it. Americans are currently spending as if the economy is booming, and twice as many say that their local economy is on the right track compared with those who say the same about the national economy.

Nor is this purely a product of partisanship. Although Republicans predictably give the economy the lowest marks, even Democrats are strikingly negative. In a recent Atlantic poll, only 33 percent of self-identified Democrats said that the national economy had gotten better over the previous year.

For their analysis, Harris and Sojourner didn’t look at Fox News or other partisan media. Instead, they used the San Francisco Fed’s Daily News Sentiment Index, which tracks the degree of positive and negative language in economics coverage in a set of 24 newspapers, including The New York Times and The Wall Street Journal. (This sort of text-based sentiment analysis has its limitations but is helpful for tracking directional shifts over time.) They found that something changed over the past seven years: Even controlling for the underlying indicators, economic coverage has gotten sharply more negative overall. The authors stress that they can’t prove that this shift caused the drop in consumer sentiment. But if people are influenced by what they read, then it would stand to reason that the shift in coverage has played a role.

(It’s worth noting that the database is made up mostly of local and regional papers that have seen budget cuts and staffing reductions over the past two decades. The Brookings paper doesn’t explore what impact, if any, that shift may have had on the tone of economic coverage.)

If media negativity helps account for the bad economic vibes, however, that explanation poses a fresh puzzle: Why did the media’s coverage of the economy suddenly get more negative? One tempting interpretation is that the negativity bump, which began around 2017, reflects the media’s anti-Trump bias. The problem with that theory is that coverage got even more negative after Biden took office. Perhaps the answer is less a single cause than a series of shocks to the media ecosystem. The first was Trump’s election, which was widely interpreted as proof that the economy was not working for most Americans and sent journalists scrambling to figure out what exactly had gone wrong. Then came a totally different shock: inflation. The last time America had witnessed high inflation was in the 1970s, when prices escalated out of control and it took nearly a decade of high unemployment to get things back on track. Once inflation took off in 2021, the experts whom reporters spoke with were almost unanimous in their expectation that the country was on the verge of something similar. What in normal times would be great news—more jobs, rising wages—came to be interpreted as signs of a looming wage-price spiral or Fed-engineered recession.

We also can’t rule out the possibility that, when it comes to the relationship between the media and public opinion, the causal arrow runs in the opposite direction: Maybe the vibes are driving the coverage, not the other way around. Journalists are people, after all—in fact, we’re people who are paid to be attuned to what other people are experiencing. In a forthcoming paper, the political scientist Christopher Wlezien analyzes the relationship between consumer sentiment and media tone from 1980 to 2013. He concludes that although the influence runs in both directions, public attitudes toward the economy tend to shape economic coverage far more than the coverage shapes people’s attitudes. Could this explain the divergence of the past few years? If history is any guide, few forces can tank public perceptions of the economy as dramatically as bouts of high inflation can. The media might simply be doing their job well, picking up on already terrible economic sentiment. “When I was working for the Biden administration, we were terrified of saying anything too good about the economy, because we didn’t want to seem insensitive to how people were feeling,” Harris, who previously served as the assistant secretary of the Treasury for economic policy, told me. “I think journalists are under similar pressure.”

That pressure may finally be easing up. The San Francisco Fed’s Daily News Sentiment Index has been steadily rising since October and is currently at its highest point since early 2021, before inflation began taking off. “Robust U.S. Job Growth in November Is the Latest Sign of a Durable Economy,” read a December headline on the New York Times home page after the economy added 200,000 jobs. That month, consumer sentiment rose so suddenly that it reversed the declines of the previous four months. That seems like, well, good news.

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