What the media isn't telling you about our economy

Judging from the media coverage, you might think that our economy was improving. You’d be wrong.

The truth is that the slowest recovery on record appears destined to set even more records for slow growth. That’s not good news for President Obama. And more bad economic news hit him this past week. Here's a short list of indicators:

-- Slow GDP growth: GDP rose at an annual rate of just 1.25% during April through June, barely keeping up with the growth in population. The economy has been getting slower and slower since the end of last year.

-- Durable goods orders plunged 13.2 percent in August.

-- Median household income has actually fallen. Income has dropped from $53,718 to $50,678 since the “recovery” started in June 2009.

Despite all this, the news media has been uncharacteristically cheerful the last couple of months. Take some of the newspaper headlines from August, when the unemployment rate had gone up again for the second time in three months, rising from 8.2 to 8.3 percent. The Wall Street Journal headline read: “Job Gains Spark Stock Rally.” The New York Times reported: “Hiring Picks Up in July, but Data Gives No Clear Signal.”

These headlines can’t truly be labeled “dishonest,” but they are misleading. Initial job growth was reported to be 163,000 (later revised downward to 141,000), but the working age population had grown by 198,000.

The media decided to emphasize the small grain of positive news that they could find in the report which was the slight uptick in jobs.

But the press isn’t always so consistent. You won't be surprised to learn that when there is a Democratic president in the White House, the media tend to view things in a positive light. When Republicans are at the helm, they are more negative.

Kevin Hassett at the American Enterprise Institute and I recently studied newspaper headlines from 1985 to 2004. We looked at the percentage of newspaper headlines that were positive when new economic numbers were released. For example, after accounting for the unemployment rate and new jobs and whether those numbers were increasing or decreasing, we looked at the percentage of newspaper headlines for those stories that could be classified as positive, negative, neutral or mixed.

Here's what we found: For the top 10 largest newspapers, for the same types of unemployment news, the headlines were 15 to 16 percent more positive when a Democrat was president.

Today, it appears that the mainstream press is particularly eager to support President Obama. They are bending over backward to spin the economic numbers in a positive way.

In September and August, The Wall Street Journal and New York Times gave Obama slightly more positive headlines than Bill Clinton would have received with the same economic news.

President Obama also got more than 20 percent more positive headlines than our data indicated that similarly situated Republicans would have gotten. This more positive coverage has a real impact on people’s perceptions of the economy. More positive headlines raised people’s perceptions that the economy was getting better. The average difference in positive headlines between Democrats and Republicans produced about a four-percentage point increase in respondents viewing the economy as getting better.

In a close election, that difference can mean a lot.