Fox News guests and hosts have accused the media of deliberately trying to cause a recession to undermine President Donald Trump’s re-election prospects. (https://www.businessinsider.com/fox-news-guests-hosts-accuse-media-cause-recession-undermine-trump-2019-8)
Stocks plummeted last Wednesday after the U.S. bond market fired off a warning sign with an inverted yield curve, which reflects long-term interest rates on bonds dropping below short-term interest rates.
An inversion of the yield curve indicates that bondholders are spooked by the prospects of short-term bonds and are instead putting their money into long-term bonds, and has preceded every U.S. recession since World War II.
For its part, the Trump administration is downplaying fears of a possible recession, which is defined by negative GDP growth for two consecutive quarters.
“We have the strongest economy by far in the world. The tariffs have caused nothing, or very little. I don’t see a recession. The world is in a recession right now … China is doing very poorly,” Trump said to reporters in New Jersey on Sunday, referring to the tariffs his administration has levied on foreign imports from China.
Trump has gone so far as to even suggest to aides that the Federal Reserve Bank, the media and other countries are all conspiring against him to cause a recession specifically to target him, The New York Times reported.
However, research has shown that the media have little influence on the economy.
In an article by Daniel J. Hopkins, Eunji Kim Soojong Kim published in Sage Journals, the authors raise the question: Does newspaper coverage influence or reflect public perceptions of the economy? (https://journals.sagepub.com/doi/full/10.1177/2053168017737900)
They conclude it does not, stating that research has shown media influence on public perceptions in this realm is more commonly assumed than demonstrated.
“Given media outlets’ need to attract and maintain an audience, it is plausible that their coverage will follow public opinion, telling viewers and readers what they already believe to expand and maintain market share (George and Waldfogel, 2006; Gentzkow and Shapiro, 2010),” they write. “In this approach, media coverage still varies in tone, but public opinion chiefly shapes media coverage rather than the reverse.”