The Media’s Negativity Bias in Economic Reporting: A Cause for Concern?

The Media's Negativity Bias in Economic Reporting: A Cause for Concern?

A study reveals that economic news coverage has become increasingly negative, creating a disconnect between the media’s portrayal and the actual health of the economy.

The media’s role in reporting economic news has always been crucial, providing the public with vital information about the state of the economy. However, a recent study from the Brookings Institution suggests that the media’s coverage of economic news has taken a turn towards the negative in recent years, exacerbating a sense of pessimism among the American public. This shift in reporting has led to a growing disconnect between the media’s portrayal of the economy and the actual economic indicators. As the study reveals, this negativity bias has become even more pronounced during the Trump and Biden administrations, raising questions about the impact of media coverage on public perception and economic sentiment.

The Negativity Gap: A Shift in Economic News Coverage

The study conducted by economists Ben Harris and Aaron Sojourner analyzed the sentiment of economic coverage in mainstream newspapers from 1988 to 2016. They found that during this period, the sentiment of economic stories aligned closely with the economic indicators. However, this relationship began to break down during the Trump presidency, with coverage becoming more negative than what the economic fundamentals would predict. This trend continued and even intensified after Joe Biden took office. From 2017 to 2023, the media’s “negativity gap” was nearly five times larger than in the previous three decades, according to the study.

The Disconnect Between Perception and Reality

The media’s negative portrayal of the economy may help explain why the American public has a pessimistic view of an economy that, by most measures, is robust. While some of this negativity can be attributed to rising prices post-pandemic, surveys show that many Americans are misinformed about the actual state of the economy. A significant number believe the U.S. is in a recession when it is not, and they perceive that prices have risen faster than wages, which is not the case. Interestingly, people’s feelings about the national economy do not align with their own experiences, as Americans continue to spend as if the economy is booming, and more individuals believe their local economy is on the right track compared to the national economy.

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The Role of Media Negativity and Public Opinion

Harris and Sojourner’s analysis focused on mainstream newspapers, using the San Francisco Fed’s Daily News Sentiment Index. They found that economic coverage in these newspapers became significantly more negative over the past seven years, even when controlling for underlying economic indicators. While the study does not establish a causal relationship between media coverage and consumer sentiment, it suggests that the media’s negative tone may influence public perception of the economy. However, another study by political scientist Christopher Wlezien indicates that public attitudes towards the economy often shape economic coverage more than the coverage shapes people’s attitudes. This raises the question of whether the media’s negativity bias is a reflection of public sentiment or a driver of it.

Explaining the Shift in Media Coverage

The sudden increase in media negativity towards the economy since 2017 cannot be solely attributed to partisan bias. Coverage became even more negative after Biden took office, challenging the theory that the media’s negativity was solely a response to the Trump presidency. Instead, the shift in coverage may be a result of a series of shocks to the media ecosystem. Trump’s election led to a reevaluation of the economy, while the resurgence of inflation in 2021 triggered concerns about a potential recession. What would typically be seen as positive economic news, such as job growth and rising wages, was interpreted as signs of an impending crisis. Journalists may also feel pressure to reflect public sentiment and avoid seeming insensitive to people’s economic concerns.

Conclusion:

The media’s negativity bias in economic reporting has created a disconnect between the media’s portrayal and the actual state of the economy. This has contributed to a sense of pessimism among the American public, even as economic indicators suggest a healthy economy. While it remains unclear whether media coverage drives public sentiment or vice versa, the media’s role in shaping public perception cannot be ignored. As the economy continues to recover, it is essential for the media to strike a balance between reporting on challenges and highlighting positive developments, providing the public with a more accurate understanding of the economic landscape.

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