Thursday 12 September 2019

Business News and Economic Forecasting: The Uncertainty Cycle

I listened to the new CBC radio show "The Cost of Living" in the truck today while hurtling down the TransCanada from MooseJaw to Alberta... There was a thing that kept coming up, and it troubles me...
They talked about "uncertainty" a lot. About how people feel like they are falling behind economically. They talked about how this makes people anxious, and how that anxiety leads to more uncertainty and slowing economic growth... 
They talked about how a university team of economists analyzes economic news coverage for key words for key words, like "uncertainty", and uses the tabulation of these words to make pronouncements about the state of the economy. 
These pronouncements inform how people feel about the economy. And the media reports on how much anxiety is growing. And the university economists collect that data and pronounce again that the economy is uncertain and worsening. Rinse and repeat.
In other words, it's an echo chamber, driven by the media coverage. They also talked about how people have the perception that they are slipping down, out of "middle class". Of course, they are being told by the media that this is happening. Then the media talk to people and they say they are falling behind, and media report that and more people feel like they are falling behind and the academic economists look at that data and confirm that the economy is worsening, and the media reports it and people hear that and feel more uncertain. And so it goes. Round and round and round. But Stats Canada shows that the median income in Canada is rising as poverty declines under the Liberal government: 
It's important to remember that "middle class" depends in large part on where you live in Canada. If you live in Fort Mac, you need a household income of $91K to be middle class, but if you live in Charlottetown, PEI, a household income of $30K puts you in the middle class range. 
Incomes vary widely across Canada, as do the costs of housing, post-secondary education, food, heat, etc. There is no universal Canadian middle class definable bracket. 
The six-figure-income Albertans screaming because they aren't rich enough look greedy to those scraping by in other parts of the country. At the same time, those in other parts of the country are feeling poorer and poorer because the media tells them they are. 
Conservative parties, federally and provincially, play on this, enhancing the anxiety, declaring the economy is in shambles, when it really is not.
Consequently, I conclude that the media reports of economic uncertainty and instability are another subtle way the media is fueling discontent with the current government and reinforcing the conservative messaging without empirical data to support it. 
As they have been doing in every area this past year. Postmedia has a mandate to undermine the Liberals and install a CPC government. What is the CBC's excuse?

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