Is the liberal media bad-mouthing the U.S. economy?
It seems that way. The potential impact of President Trump’s tariffs, rising interest rates and slowing growth overseas have consumed headlines, while dropping stock and oil prices have been cast as predicting a slowdown or even a recession right around the corner.
{mosads}Those concerns are valid, but the gloomy forecasts have elbowed out contradictory reports of robust job and wage gains, declining inflation, consumer sentiment that remains near an 18-year high and — oh yes — booming retail sales.
The holiday season got underway in earnest over Thanksgiving weekend, and the reports are extremely positive. Spending on Cyber Monday jumped 19 percent, while Black Friday spending was ahead an estimated 9 percent.
CNBC managed to dull the cheerful news with a headline that read: “Fewer people shopped during the 5-day Thanksgiving weekend, but holiday sales seen as strong.” They did note that the National Retail Federation is predicting a holiday sales increase between 4.3-4.8 percent, emphasizing the top of that range.
Not only was overall spending strong, but retailers reported that lower-income Americans especially stepped up, suggesting that the better jobs and wage picture, as well as declining gasoline prices, had helped out workers.
As the Wall Street Journal noted, “Pay in the retail sector, one of the country’s largest employers of hourly workers, rose 3.8% in the second quarter…”. The buoyant sales figures dovetail with Evercore ISI’s surveys of retailers, which economists at that shop have described as “surging” and “particularly strong.”
The ISI folks note that “over the past 20 years, there has been an 86% correlation between S&P performance in the 4th quarter and Holiday Sales (nominal retail sales).” With the S&P on track to be down 8 percent, that would suggest a decline of 6 percent in holiday spending, which is clearly not happening.
As they see it, either the strong jobs environment and other positives are overcoming lower stock prices, or the stock market’s influence on consumers has declined.
I would suggest a third possibility: that the stock market sell-off has been driven in part by glass half-empty reporting, which the media has been happy to endorse. It makes sense. The accelerating economy has offered the strongest possible validation of the Trump agenda of lower taxes and lighter regulation, an agenda detested by the left.
The Media Research Center reported that between June 1 and Sep. 30, 92 percent of network TV coverage of President Trump was negative. Moreover, two-thirds of the coverage concerned five topics: the Mueller investigation, immigration, the Brett Kavanaugh nomination, North Korea and U.S.-Russia relations.
The economy, presumably of some importance to Americans, got 1 percent of the air time, or, to be precise, 14 minutes over those three months. One economic issue the networks did cover (80 minutes) was Trump’s tariffs. The coverage was 88 percent negative.
Approaching the midterm elections, Democrats and the left-leaning media belittled the impact of the Trump tax cuts, desperate to distract voters from the good news of record-low unemployment for African-Americans, Hispanics and women, the growth in manufacturing jobs and improving business and consumer sentiment.
They focused instead on what New York Times columnist David Leonhardt described as a “Trump Slump” in real wages and what the paper itself suggested was the corporate habit of “not sharing the wealth with workers.”
In an editorial in August, the Times wrote, “There are more signs of a slowdown as the tax cuts’ stimulus proves weak, temporary and maybe even counterproductive.”
Some liberals, like Bill Maher earlier this year, have openly wished for a “crashing economy” in order to “get rid of Trump.”
More recently, MSNBC anchor Andrea Mitchell interviewed Austan Goolsbee, former Obama economist, sounding various warnings on the state of the economy; both felt the need to declare that of course they were not hoping for a downturn; of course not.
For sure, there are signs that the U.S. economy has cooled from the rapid growth earlier this year. But lower oil prices are not necessarily signaling a slowdown; they fell after the U.S. allowed higher-than-expected exports to continue from Iran.
The Federal Reserve is raising rates, which is impacting housing an undoubtedly causing some cooling of growth, but Fed Chairman Jay Powell has indicated what everyone should expect, which is that he will back off if the economy stumbles.
Noting that consumer spending had pushed growth to 4.2 percent in the second quarter, the Times opined “that won’t necessarily continue,” referencing a Reuters analysis that “found that the bottom 60 percent of income-earners have been fueling their spending, and thus the economy’s, by using their savings or credit cards.”
That was necessary, said the Times, “because wage growth is expanding at a disappointing 2.7 percent annual clip — despite evidence that employers are finally throwing a few more pennies at workers.”
{mossecondads}Turns out, those pennies pile up. With unemployment at a 49-year low of 3.7 percent, wages have started to rise. The Labor Department’s Employment Cost Index report showed wages up 2.9 percent in the third quarter, the most since 2008.
Continuing the trend, wages rose in October by 3.1 percent, pushing workforce participation higher as well. The share of Americans between 25 and 54, prime working age, in the labor pool jumped to 82.3 percent, the highest level since 2010, and an important ingredient in sustaining the country’s growth.
The good news for retailers, and for the economy, is that Main Street isn’t paying all that much attention to Wall Street. Maybe that’s because, despite all the negative messaging from the liberal media, Americans are in fact doing better than they have in years. Last weekend, they went shopping to celebrate.
Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. For 15 years, she has been a columnist for The Fiscal Times, Fox News, the New York Sun and numerous other organizations.