Misreporting gives a wrong picture of the U.S. economy

With rising incomes, soaring wealth, bigger and better homes, plenty of jobs and low inflation, Americans may be living in the most prosperous time ever. Yet, many Americans are sold on the idea that these are the worst of times, says Investor's Business Daily (IBD).

The economy is not perfect. But it is a long way from bad. Consider:

  • Since May 2003, when President Bush's tax cuts became law, the United States has created 4.7 million jobs; payrolls have expanded for 30 straight months and the jobless rate, though up a tick at 4.8 per cent, is still near its five-year low.

  • Average weekly earnings rose 3.5 per cent last month from a year earlier – the best gain in more than four years.

  • Based on the continued job growth and powerful gains in retail spending, most analysts expect gross domestic product (GDP) to jump at least 4.5 per cent in the first quarter and 3 per cent for all of 2006 – even as the Federal Reserve continues to tighten credit.

    Despite all the great news, Americans remain strangely downbeat. Why the gloom? Much of it, no doubt, stems from misreporting by the media, explains IBD:

  • A recent study by the Media Research Centre looked at TV news coverage of jobs in 2005 – 151 stories in all – carried on all three major networks.

  • Despite the creation of 2 million new jobs, the addition of $350 billion to GDP and an increase of $2 trillion in the value of household financial assets, more than half of the networks' job reports focused on losses not gains – a picture that was not just distorted, but wrong.

    Some people believe Americans are being influenced too much by mainstream media outlets that would rather be wrong than acknowledge that an economic boom is under way, says IBD.

    Source: Editorial, Missing The Boom, Investor's Business Daily, March 10, 2006.

    For text: http://www.investors.com/editorial/IBDArticles.asp?artsec=20&issue=20060310

    For more on Economy: http://www.ncpa.org/iss/eco/

    FMF Policy Bulletin/ 21 March 2006
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