Financial journalists needs to improve their economic literacy

Anya Schiffrin of Columbia University argues for improved understanding of the economy among financial journalists in a commentary piece for The Guardian in London.

Schiffrin writes, “A study I did at Columbia University last year with Ryan Fagan (‘Are We All Keynesians Now? Press Coverage of the US Stimulus Package’, forthcoming) looked at press coverage of the $787m American Recovery and Reinvestment Act of 2009. We analysed 718 articles about the stimulus in the months before and after it was passed. We looked at all the key mainstream US publications including the New York Times, Barron’s, Los Angeles Times, Associated Press, Time magazine and others. The coverage was not bad, but it was in no way innovative or forward-looking. Instead of discussing the likely effectiveness of the stimulus, for example, most of the articles before passage simply focused on whether or not it would pass.

“‘The concept of a Keynesian stimulus is not immediately intuitive. It would have been nice if there had been more in-depth explanations. As it was, there was more of ‘what happened yesterday’ than ‘what are the long term implications?’ but that’s not unusual,’ said one national economic reporter, describing the press coverage.

“Five months after the stimulus passed, the unemployment rate was still climbing. (It was 8.2% in February, 9.4% in July and 9.7% in August 2009, and today stands around 9.0%, depending on how it’s counted.) That led to a spate of articles about whether or not the stimulus would work or had worked. These articles mostly said it wouldn’t and mostly didn’t mention the fact that the majority of the money had still not been spent. Instead, a number of the articles argued that since the stimulus had failed, the US government should not consider a second one.”

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