Guest Opinion: The Full Truth About the Economy Is Too Complex for Headlines1 Mar, 2009 By: Doug Garnett Response
An alternative view of the financial 'catastrophe.'
In case you haven't heard, we're in a recession. And news outlets couldn't be happier.
Finally, financial reporters have captured the top of the hour, all from a crisis with no apparent end and no absolute solution. But will their gleeful doom and gloom drive us from recession into depression?
Lions & Tigers & Bears
The difference between tone and fact in a Dec. 29 Bloomberg article started my personal campaign against media hype. Titled "Holiday Sales Drop to Force Bankruptcies, Store Closings," this article reported that total store closures for 2008 would likely hit 148,000.
That sounds bad — until you read further and find out that this is only the worst total since 2001. In truth, more than 100,000 stores normally close in a year and 153,000 stores closed in 2001. So in 2008, perhaps 10,000 unexpected mom-and-pop store closings were spread across 200 DMAs (an average of 50 per DMA).
The article also notes that the S&P retail stock index is down 35 percent. This says nothing about the economy. Besides, the Dow Jones dropped 32 percent in 2008.
November Spending Was Actually Up
Note also the poorly chosen title for a Dec. 24 Associate Press (AP) article: "November Personal Spending Falls 0.6 Percent." Deep in the article you find that the drop is due solely to gas prices and that "(e)xcluding price changes, consumer spending would have ... actually risen by 0.6 percent in November." So, in November consumer demand was up, and consumers paid fair prices for goods.
December Was Bad, but Not Too Bad
On January 8, retailers released their numbers and the AP article was titled "Retailers Report Dismal Sales." Buried in the article we learn that Target, Macy's and even JCPenney beat expectations, and that sales increased at both Wal-Mart and Costco.
Competing to Dramatize the Crisis
Driven by viewership, ego and money, the media profits from cataclysm. Networks and newspapers need it to increase viewership and readership, and "expert sources" need the screen time on 24-hour networks to build their consulting businesses.
Cataclysms offer reporters career-making opportunities. What reporter wouldn't kill to say: "Well Bob, the fourth horseman of the apocalypse arrived this morning. Retail analysts are telling us to stockpile water and prepare for Armageddon. We're expecting a statement from Saint Peter at any moment. Back to you."
Left Unreported: Truth
Truth is found in the complexities of competing facts. Unfortunately, simplification to the point of stupidity attracts news viewers. What we haven't heard includes:
had record sales in fourth quarter
- 2. Malls were packed with shoppers spending money
- 3. A growing number of analysts offer optimistic assessments of 2009
My own clients' fortunes are pretty good. One luxury product saw sales drop due to soft consumer spending. A couple more lost sales for reasons I believe are unconnected to the economy. One client mounted a major 4Q effort and saw astounding retail sell-through. The rest were a mix of down slightly down, static or up slightly.
What Should Have Been
The real truth of this year's holiday shopping season is that sales would have been much better without the media hype (made worse by two months of presidential campaigning). That hype helped turn a crisis in the financial industry into a broader crisis that affected retail.
News reports destroyed consumer confidence. Media hype caused retailers to curtail orders from manufacturers. And manufacturers have undertaken pre-emptive layoffs that don't appear required by business realities.
Recession or Depression?
Media misreporting may change what might have been a recession into a depression. But knowing that the depth of this crisis may be media-induced should change our actions, and we should never read or hear a headline without digging deeper to find the truth.
Doug Garnett is president of Atomic Direct — a boutique DRTV agency specializing in consumer and retail products. He can be reached via E-mail at