We are in an economic crisis -- aren't we? Open a newspaper, turn on the TV, navigate over to any news site, and you'll most likely find something about how bad the economy is. A word like "recession" makes enough of an impression to spin most people into a depression. Yeah, I know that was very bad on my part -- sorry.
My question though is this: Are we really in such bad economic straits as what the media makes out? Before I start, let me point out that I'm not a financial guru, nor am I an economic analyst. I'm just a relatively normal guy. I have noticed a few things over the years.
First of all, let's look at the gas situation. Right now prices hang at a tolerable level (comparatively speaking). What drove them up during the last year? Part of it was various disasters like Katrina, which there's not much that anyone can do about that. Gas-guzzling SUV's and other large vehicles play their part also. I don't really want to touch the effect that oil futures being traded on the stock market had on prices either. Remember when gas shortages were feared to happen? Especially when it turned out that there was plenty? What happened? We heard about it through the media, and people rushed out to fill their tanks. What happened then? Yep, there were shortages. Self-fulfilling prophesy?
What about hot toy shortages at Christmas time? Tickle-me Elmo? The Wii? Were they that hard to find before the media started covering it?
Food prices. I hadn't really noticed any increases during the skyrocketing oil prices until it was mentioned on TV. Next day, there were raised prices. Was the media simply reporting what was happening, which hadn't happened here yet? Did the store owners or the food producers see the reports and figure that we were expecting the increases? Or were there a few localized increases here and there which the media reported about, and everything spread like wildfire?
The housing market seemed to be doing fine. Home improvement and house flipping shows were very popular. People saw that there was money to be made in buying, remodeling, and selling homes. Hey wait, they're saying on the TV that the housing market is crashing! What happens? People flinch away and decide that it's a good time to close up the coffers. What happens? The housing market does crash.
Oops, there are reports that unemployment is on the rise. Suddenly companies are laying people off. Are they doing it because there's a good reason, or because they want to stay ahead of economic problems from the news?
So back to the economy. There was a gentleman in the library a couple weeks ago. Nice guy from Canada. He printed out some directions and someone asked him how the economic crunch was hitting people north of the border. He said that everything was normal until they heard about the economic problems that the US was having... wait for it... through the media.
What am I trying to say? Are we in a recession because there really is a recession, or are we in a recession because we're afraid that the economy is bad making everyone circle the wagons and wait for better times? Sure, times are bad. I won't deny that, but I also thing that we are only contributing to the problem. We listen to the media talk about just how bad it is or how bad it might get, and we believe. By believing, we're giving more power to what we're being told and making it real.
What would happen if tomorrow the media began saying that the economy had stabilized and everything had turned around? Would jobs suddenly reappear? Would people believe that there's new hope with promises of change? Would people start spending normally again? Probably not, or at least not quickly. People tend to believe bad things very easily and talk share the negative things far more than they do good things.
Is the media responsible for the economy? Yes, no, maybe. It might sound like I'm really bashing the media, but they're not totally to blame. When you hear there is something bad lurking around the next bend, it's a natural instinct to be cautious. Caution is good for keeping yourself safe, but the whole world being cautious with their collective wallets is bad for the economy.
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