Nets Barely Notice Surge in GDP as They Focus on Dow Plunge
The ABC, CBS and NBC evening newscasts on Friday all devoted full stories to the fall in the stock market, touted as "the worst two-day point drop for the Dow in five years," but barely had time for a sentence about the 3.4 percent second quarter jump in the GDP, the biggest in over a year. In fact, neither ABC nor NBC cited the specific 3.4 percent rise in the Gross Domestic Product, the measure which the AP on Friday described as the "best barometer of the country's economic fitness." Not one of the three evening newscasts mentioned how the Dow is still well above the 13,000 level it broke through in April and none noted fresh good news on inflation.
Not even reporting what second quarter GDP growth actually was (repeat: 3.4%) is flat-out negligence.
Also conveniently overlooked: As of Friday's close (last year's closing numbers are here), the Dow Jones Industrial Average, at 13265, was up 6.4%, or over 800 points, for the year thus far. The S&P was up a less impressive yet positive 3.3% (from 1418 to 1459), and the NASDAQ was up 6.1% (from 2415 to 2562).
Yet the nets want their ever-shrinking evening news audiences to believe that the sky is falling.
While the following should not be construed as investment advice by yours truly or anyone else at NB or MRC, it's worth nothing that Don Luskin at Smart Money has plenty of reasons why the Chicken Littles are more than likely full of chicken ..... you know:
THE FINANCIAL MEDIA is so promiscuous in its use of negative language to describe the stock market when prices go down. Stocks "slid," "plummeted" or even "collapsed." You hear it all the time, even when nothing really happened.
So what words are left to describe a really big down day like Thursday? How about, "Stocks became a better bargain than ever!"
..... So don't be afraid just because you see stocks slide, plummet or collapse. Not even if you see them get nuked, trash-compacted, reamed, steamed or dry-cleaned.
..... We're talking about a disruption in the markets, not a disruption in the real world. Markets are amazingly adaptable, and they will adapt to this uncertainty and quickly transform it into certainty.
Stocks have dropped in response to heightened uncertainty, not actual deterioration of anything in the real world outside of markets themselves. When that uncertainty is resolved, stocks prices will quickly rise, because the real world will be, and has been all along, a very good place. Earnings are improving, jobs are plentiful and the economy — other than the small portion of it devoted to housing — is accelerating.
Speaking of the accelerating economy, this little non-template fitting sentence in the prior-year revisions section of the government's GDP report also fell to the networks' (and the rest of Old Media's) cutting-room floor (bold is mine):
The average annual rate of growth of real disposable personal income for 2003-2006 was 2.8 percent, 0.3 percentage point more than in the previously published estimates.
That means real disposable income (i.e., after income taxes) is up over 11% in 4 years (2.8% times 4). That's awfully good news, and further punctures the "stagnant incomes" meme. No sense in interrupting the gloom and doom with contrary reality, I suppose.
Cross-posted at BizzyBlog.com.