NY Times Columnist Acknowledges Media Feed Economy Fear

December 8th, 2008 10:36 AM

     The media love to assign blame for financial hardship, but it’s rare that they turn the microscope on themselves like columnist David Carr did in The New York Times Dec. 8.

     In a front page column of the Business Day section, Carr noted the media’s role in stoking and spreading fear about the economy. He said the speed and reach of the digital news age helped quicken and probably deepen recession.

     “With unemployment, auto sales, home foreclosures and consumer confidence all benchmarking historic levels of distress, news outlets are hardly making it up,” Carr wrote. “But the machinery of the economy began to freeze in place far more quickly than it has in the past, in part because so much scary data is circulating so much faster than it used to. This recession got deeper faster because we knew more bad stuff quickly.”

     The barrage of constant bad news can affect people who don’t find themselves in financial trouble, Carr noted, citing Dan Ariely, the author of “Predictably Irrational.”

     “When everyone is talking about recession, we all feel like something has to change, even if nothing has changed for us,” Ariely said. “The media messages that are repeating doom and gloom affect every one, not just people who really have trouble and should make changes, but people who are fine. That has a devastating effect on the economy.”

     Carr also quoted University of California, San Diego, associate professor James H. Fowler, who pointed to a herd mentality in overreacting to bad economic news.

     “There are studies in bank runs, and it shows that people who know others who have taken their money out of the bank are much more likely to do it as well,” Fowler wrote. “We always overshoot the upside and, because of the same contagious effects, we overshoot the downside. Everything is fine, then all of the sudden we are looking for water and supplies to ride out the coming storm.”

     Carr isn’t the first journalist to acknowledge the media’s role in perpetuating strife. In February, CNBC’s Maria Bartiromo warned that reporters’ doom and gloom could make matters worse.

     “[T]he truth is, Meredith, it doesn’t matter if we’re in a recession,” Bartiromo told NBC “Today” show co-host Meredith Vieira Feb. 6. “We can talk ourselves into a recession, and that seems to be what we’re doing right now and that certainly begets more weakness.”