Market Analysis


Scanning recent news articles, one cannot help but wonder if the journalistic position de rigeur is the US is a crumbling empire, and the demise can't come soon enough to satisfy The New York Times.

Scanning recent news articles, one cannot help but wonder if the journalistic position de rigeur is the US is a crumbling empire, and the demise can't come soon enough to satisfy The New York Times.

Here's one example. An article(1) released by Dow Jones began thusly, "German unemployment declined in November . . . showing that Europe's largest economy can continue to grow even as the U.S. economy slows."

Well, good for the Germans! Maybe some additional Teutonic industriousness will reduce the bugs in my Passat's onboard computer. But bad news for us lazy Americans. We're slowing, they're growing—that's the intended takeaway from this article. No need to bother with the nitpicky details further down the page. Too many big numbers.

Journalists know most readers generally don't read full articles. First thing they teach you in journalism school is to pack the who/what/when/where/how in the first paragraph. (The second thing is to drive a Prius and never question global warming.) Leave the boring, supporting "details" to the end of the article. Chances are, very few readers will make it that far.

But suppose you did read the rest of this particular article? It appears German unemployment fell from 10.4% to 10.2% in October. Unemployment in the U.S. is still hovering around 4.5%. What's more, German unemployment is typically double digits, whereas unemployment below 5% in the US has become a non-event.

But that's not what you get from the first paragraph. Isn't this a bit like giving an award to the D student who somehow managed a C minus one semester, while telling the A student he displays a disappointing lack of grade progression?

Here's another example of the journos' love affair with the European economy. A recent editorial in The Wall Street Journal(2) lauds the euro zone's growth, which is expected to be 2.5% or more for 2006. Again, good news for our beret wearing friends who've had sluggish growth for decades, but 2.5% growth for the U.S. would be reported as more evidence of our fall from glory.

Why must we praise economic progress in foreign lands by bashing ourselves, as if the global economy is some gigantic, binary, zero-sum game? Why can't we just accept that we have a well-diversified, dynamic economy?

Here's another fun one. CNN Money reported that US unemployment is near record lows(3). Even for those without high school degrees, unemployment is a very low 5.8%. Sounds like the Germans would be better off moving here and slacking off! But hang on, the article's title is, "The Missing Pay Hikes." It seems this year raises won't be as big as folks expect.

I don't have a hidden camera in CNN Money's offices, but I imagine this article was written with a straight face. If you read on, you realize base pay isn't expected to rise much, but bonuses are. In other words, more people are working, and getting paid more too. In the deft hands of a journalist, this is somehow negative.

Here's a brief primer on economic reporting: Jobs are up? Then inflation is a worry. GDP growth is on the rise? It's not as high as projected. Unemployment is down? They're the "wrong jobs."

The truth is, the US economy is healthy, growing, and evolving. Despite the best efforts of about 90% of all journalists, the US leads the developed world in GDP growth, unemployment, productivity, per capita income, you name it. And it's done so for decades. No other country has successfully come close for a sustained period. Japan was chasing our coattails for a while, but stumbled. Germany has flashes of brilliance, then goes and adds buggy computers to all their fine driving machines.

Why is an honest portrayal of our economy hard to come by? Some may shout, "Liberal bias!" and that may be part of it. Unemployment could be zero and GDP growth annualizing 15% and some journalists would still blame George W. Bush for rush hour traffic.

But beyond bias, journalists, as a group, aren't particularly skilled at economic analysis. In fact, most of them are English majors. Or American Studies. Or Poli-sci. Or something equally long on politically-correct America bashing and short on facts(4). They do not study statistics. They do not take seminars in macro-economics. Most could not tell supply side from off-sides. (They usually got picked last for kickball during P.E. classes too).

The journalist's job is to write compelling copy, and not get caught in a lie. That's it. Any data and accompanying analysis should be regarded with, at minimum, severe cynicism.

Now, as for their knee-jerk anti-Americanism, that, I believe, is a direct result of being picked last for said kickball game.


(1) Steve Goldstein, "UPDATE: German Unemployment Falls In November," Dow Jones Newswire, November 20, 2006
(2) "It's Alive!" The Wall Street Journal, December 8, 2006
(3) Chris Isidore, "The Missing Pay Hikes,", December 6, 2006
(4) In the interest of full disclosure, Ms. Hoffmans was a theater major.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.