Can media coverage hurt the economy?

Rick Montgomery of the Kansas City Star writes this past weekend about whether media coverage of the economy can make it harder for the economy to recover.

Montgomery writes, “Perhaps none of this relates to anything but simple sense about what makes news: When our economy seems to start correcting itself from freefall — as it did that summer two years back — the scribes and talking heads pivot to hotter issues.

“‘It’s not that consumers are dancing to the beat of pundits and newscasters. I think it’s the other way around,’ said Ken Goldstein, an economist for the Conference Board, which issues reports on consumer confidence.

“People lose faith in their economy only when the media drumbeat coincides with what they see in their lives, he said: Friends out of work, retirement accounts sagging, homes foreclosed down the block. And many are seeing all of those things.

“Are people’s perceptions shaped by what they see on TV or read in the paper? … It used to be, whatever Walter Cronkite said was so — but those days are long gone,”’ Goldstein said. ‘To think that today’s consumer is paying so much attention and trusting what the news media says is, to put it kindly, giving the media way too much credit.’

“Still, financial advisers such as John L. Brown know that clients ‘do get spooked’ by features on job loss or foreclosure, pessimistic opinion columns, experts’ forecasts of no relief in sight.”