Media responsible for economic downturn?

Ok, I’m hoping that this is in fact the correct forum for this, as the debate that developed at work was quite heated. However, if it rightfully belongs elsewhere, I hope someone moves it.

At work the other day, a co-worker and I were discussing the numerous corporate layoffs and the falling stock market. I’m hoping to phrase this well, but I may come across as simplistic. I have a basic understanding of the economy, but I am not an economist.

His claim: The media is largely responsible for the continuing downturn of the economy. This is because they continue to report corporate layoffs, dot-com failures etc. If they continue to report them in the same manner-for example “XYZ Technologies to lay off 26,000”-people will become stressed about the economy, spend less money, leading to more layoffs and closures.

My claim: The economy has been in a roaring cycle for far too long. Such a downturn was becoming inevitable, regardless of the media’s reporting. The media reports the effects of the economy, but does not cause further downturns. If people are spending more on the same basics (food, shelter, clothing, transportation), they have less disposable income for investing, for that new CD, whatever. They quit buying the extras, leading to a lower level of manufacturing, and from there to layoffs or potential layoffs/closures.

Does the media bear any responsibility for this, or are they reporting the effects of the downturn of a volatile market/economy?

My WAG: The money folks are nervous about presidential policies, and are temporarily hedging their bets.

It is possible for the media’s influence to alter the economy. I believe it was a joke on the Tonight Show with Johnny Carson that started the Great Toilet Paper Shortage all those years back.

However, unless news agencies are DELIBERATELY trying to destroy the economy, I don’t think they’d be able to (inadvertently or not) cause any major damage. Any fluctuations in the market caused by a news report are bound to be temporary, as people will eventually learn “things ain’t so bad”.

Any major recession will happen from genuine market loss, not from the media.

television has created a psychological feedback loop in society. what they broadcast affects what people “think” and therefore do which affects the economy and they report effects, etc… this can work in either direction. i think it has been working in the upward direction with the internet and dot-com hype, now it can work in reverse. THE ECONOMIST magazine had been talking about an internet bubble for 2 years, but it kept getting bigger. ridiculous values for amazon stock tho it never turned a profit!

Dal Timgar

just remembered.

THE Y2K BUG was supposed to end the world. how many people in the media have no imagination and just do stories on what other people in the media are doing. is it possible to have an ACCURATE perspective of reality on this planet. how could you be sure even if you had it?

Dal Timgar

One thing they can influence, however, is the consumer confidence index, which can have serious repercussions on the market.

Necros makes the important point. While the media can’t directly damage the economy (unless Steve Case decides to dump all of his AOL stock. Ditto Ted Turner) they can change the climate of opinion regarding the economy.

Covers on the weekly news magazines have been screaming panic for a month or so at this point and this can begin to feed on itself. Someone hears about layoffs 2000 miles away, TIME’s cover mentions ways to protect yourself from the coming crash, person gets more nervous and stops spending, money is removed from the economy, recession.

So the media can influence the economy, but it can’t directly damage it.

OP quoted a coworker: The media is largely responsible for the continuing downturn of the economy. This is because they continue to report corporate layoffs, dot-com failures etc.

Well, by the same token, we’d have to say the media is responsible for the previous several years of roaring boom, since they reported the stock market rises, the skyrocketing first-day share prices, the multimillionaire startups, etc. If the media really had so much control over economic reality, why wouldn’t they just go on reporting good news and thereby keep the economy flourishing? Publishers don’t enjoy the effects of recession any more than anyone else, you know.

No, your coworker has his headlight in his taillight socket. The reason the media is now reporting bad news is because the bad news is there to report (though I agree that a prolonged media feeding frenzy can magnify the negative impact somewhat). If they stopped talking about it, it wouldn’t just go away.

Has the media become the great whipping boy of our culture? It seems to me that everyone thinks that everyone else is being duped by the media.
I doubt that they have any real impact on the economy.
I kind of agree with Kimstu’s post. The media doesn’t create, they report. Although they do tend to get a little frenzied in that reporting. Most people are capable of using the old BS filter, I think.

$57,000,000,000 DOLLARS
that is what one magazine article says was spent on advertising last year. if advertisers didn’t think it had an effect would they spend THAT much money?

does this mean that producers won’t make programs that might upset advertisers. look what happened to oprah winfrey over the mad cow comments. prez bush #1 attacked for saying he didn’t like broccli.

Dal Timgar

No no, dal_timgar, I was talking about the stock market etc.
Of course advertising has an impact on what we buy. A lot more than $57,000,000,000 DOLLARS, or they wouldn’t spend that kind of money.