That may seem a strange question, given that the network packs its shows with Never Trump Republicans, but yesterday’s big rate hike by the Fed is a clear warning. The issue here is the network’s coverage of the economy, which has been inflation, inflation, inflation 24-7.
There is no doubt that inflation is a real problem. Higher prices for gas, food, rent, and other items has taken a big bite out of many families’ paychecks. It certainly warrants serious attention from CNN and the rest of the media.
But inflation is not the whole story of the economy. We also have an unemployment rate that is near 50-year low. That is a really big deal, because the vast majority of families work for most of their income.
And, a low unemployment rate is not just an issue of a few million people going from being unemployed to having jobs, as the highly paid pundits tell us. Over six million people lose or leave their job every month. That would come to more than 70 million over the course of a year, although many of these workers change jobs multiple times.
However, the point is that the state of the labor market matters hugely to large segments of the population, not just the relatively small number of people who transition from being unemployed to having job. And, in a strong labor market, tens of millions of workers feel empowered to leave a job that doesn’t pay well, has bad conditions, offer few opportunities for advancement, or where the boss is a jerk. This is a really big deal that has been almost completely missed in the 24-7 inflation, inflation, inflation coverage.
Of course, CNN does not have that large an audience, so its coverage really doesn’t matter very much in the overall picture. Unfortunately, inflation, inflation, inflation seems to be the theme of economic coverage pretty much everywhere. The gas stations in California advertising record high prices seem to be a required destination for reporters. Undoubtedly, many gas stations now plan price hikes to get publicity on national TV.
All of this could be dismissed as a silly joke, except it has real world consequences. Yesterday, Federal Reserve Board Chair Jerome Powell had a press conference after announcing the Fed’s 75 basis point rate hike, the largest in almost three decades. He said that one motivation for the big rate hike is that consumers had started expecting higher rates of inflation.
Surveys of consumer confidence have started to indicate that people are now beginning to think that inflation will persist for long into the future. Powell said that he raised rates to convince people that this will not be the case.
Now people obviously don’t need the media to tell them that gas prices and food prices are up. They see this when they buy gas or go to the supermarket. But, when it comes to their expectations of future inflation, it is likely that the media’s reporting does play a big role.
After all, most people are probably not sitting down with economic models projecting future inflation based on interest rates, unemployment, and other economic data. If they hear inflation 24-7, then they are more likely to think it is a persistent problem than if they got a fuller picture of the economy.
The fact that Chair Powell is now explicitly looking at the public’s perception of inflation when making his interest rate decisions, means that the media’s reporting is now directly influencing Fed policy. There is big risk that Powell and the Fed will go overboard with their rate hikes and push the economy into a recession.
That is a really big deal, since a recession will mean that millions of people will lose their job. It will also mean that we have a very bad labor market, where people cannot easily quit bad jobs for better ones.
And, this gets us to putting Donald Trump back in the White House. When it comes to the election in 2024, many more swing voters are likely to cast their ballot on the state of the economy than on preserving democracy. That means that by pushing the Fed to needlessly bring on a recession, the Never Trumper gang at CNN will have played a huge role in getting Trump back in the White House.
Oh well, no one ever said these folks were very politically astute.
This first appeared on Dean Baker’s Beat the Press blog.