Some readers here may have a tough time discerning why the economy's mediocre to stagnant performance isn't fully registering with the general public, which feels that things aren't going too well but still doesn't how weak the situation really is. The obvious answer is that the press overemphasizes any good news which appears and downplays marginal or bad news — while occasionally, as seen last night in Bloomberg's coverage of yesterday's largely miserable homebuilding statistics, pretending that bad news really was good.
Perfect examples of this problem came in two CNNMoney.com emails I received this afternoon. The emails has news which could be considered news, while leaving out some clearly bad news which delegitimizes their email's optimism:
Wow . A "rebound in economic activity" and "an improving job market." There must be nothing but blue skies ahead based on how the economy is going, the market's record close, and what happened at the Fed's meeting.
Well, no. CNNMoney's emails "somehow" forgot to tell readers that the first-quarter's contraction, which already is at 1 percent, is likely to come at 2 percent or worse.
More directly, CNNMoney's emails didn't include the inconvenient fact that the Fed lowered its growth estimate for all of 2014 to 2.1 - 2.3 percent from it's previous 2.8 - 3.0 percent. That's a big drop.
Two different AP reports from the Associated Press's Christopher Rugaber have the details CNNMoney's emails don't.
The first came this morning after the release of the government's international trade-relate "Current Account" report, and flagged the predicted wider GDP contraction:
US CURRENT ACCOUNT DEFICIT JUMPS FROM 14-YEAR LOW
A drop in U.S. exports and lower income from overseas investments drove the U.S. current account deficit to its highest level in 18 months.
The Commerce Department says the deficit jumped to a seasonally adjusted $111.2 billion in the January-March quarter, up from a revised total of $87.3 billion in the October-December quarter. The fourth quarter's total was the smallest in 14 years.
... A larger trade gap in the first three months of this year cut nearly a full percentage point from growth. Economists now estimate the economy contracted at an annual pace of 2 percent in the first quarter. But they expect growth will resume in the current quarter at roughly a 3.5 percent rate.
Keep in mind that this was before the Fed's release.
Rugaber's second report came out this afternoon. It covered minutes of the Fed's two-day policy meeting, and threw cold water on full-year growth projections for 2014:
FED SHARPLY CUTS FORECAST FOR US ECONOMIC GROWTH
The Federal Reserve has sharply cut its forecast for U.S. growth this year, reflecting a shrinking economy last quarter caused mostly by harsh weather.
At the same time, the Fed has barely increased its estimate of inflation despite signs that consumer price increases are picking up. Its benign inflation outlook suggests that the Fed doesn't feel rising pressure to raise short-term interest rates.
The Fed updated its economic forecasts Wednesday after a two-day policy meeting.
It expects growth to be just 2.1 percent to 2.3 percent this year, down from 2.8 percent to 3 percent in its last projections in March.
Given that analysts think the economy shrank at up to a 2 percent annual rate in the January-March quarter, the Fed's forecast implies that growth will top a healthy 3 percent rate over the final three quarters of 2014, economists noted.
Yeah, I know. Rugaber is still flogging the bogus weather excuse. It appears that the press won't budge from this pathetic copout assessment no matter how bad the reported contraction is — and yours truly thinks there's a good chance next Wednesday's revision to the first quarter could very well come in signficiantly worse than a 2 percent contraction.
And yeah, I know. He called a 3 percent growth rate "healthy." I don't think you'll find such a characterization of 3 percent growth in AP coverage during the Bush 43 economy. Look at the bright side: At least he didn't use "robust," AP reporter Martin Crutsinger's favorite word for 3 percent growth since Barack Obama became president.
Unfortunately, casual news consumers who relied on today's sunnyside-only CNNMoney emails, including many very busy people in business and industry, won't have a clue about the steeper first-quarter contraction or the Fed's full-year growth downgrade.
This kind of selective communication explains why the public isn't as down on the economy as you would expect it to be in the circumstances.
Cross-posted at BizzyBlog.com.
