Economic Perception vs. Reality

In my column at American Issues Project this week I look at the way bad reporting on economic issues often results in skewed public perception.

Since most politicians are reluctant to act without public support, what the public perceives directly influences what policies are enacted. If the public is convinced there is a crisis, an emergency requiring immediate action, they will accept drastic measures they would never have accepted otherwise. We saw that earlier this year when the “stimulus” bill was rushed through Congress.

Few in the media have done a good job reporting on economic issues. As a result the public’s perception does not always match reality. Not only can inaccurate public perception result in bad policy, but that perception can even influence the state of the economy. Nervousness over the economic future, whether based on real or faulty information, has the same effect. For example, those worried about whether or not they will have a job next month are not likely to go out and buy a new car.

There were many times during the eight years of the Bush administration when economic indicators were good — at times even better than during the Clinton years. Interest rates, unemployment and inflation were all low. The stock market was high. But for years before the country ever entered recession, the media used the “R” word over and over again.

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