Fevered Framing of Financial News Fails to Inform

Financial and economic news can be confusing under the best of circumstances. But how different media platforms report on the complexities of banking, corporate earnings and regulatory actions can make those circumstances more difficult than they need to be.

While economists and industry insiders know the lingo and are familiar with the issues, the general public is less sophisticated when it comes to financial reporting and relies on the news media to provide a context for what is happening. But in a digital world where a constant news cycle cannot hope to keep up with the flood of information, news organizations often fall short in fulfilling their primary function of providing people with information they need to make decisions in their daily lives.

A case in point is the latest Federal Reserve Board Financial Stability Report.

As part of its efforts to fulfill its objectives of fostering full employment, stable prices and a sound banking system, the Fed issues periodic releases on the state of the financial system. While the report aims to promote public understanding of the financial system and provide transparency and accountability for the Fed’s work, the findings are open to interpretation.

The headlines in the business and financial media following the most recent release of the report show just how much latitude there is in scrutinizing the Fed’s work.

The New York Times take on the report comes under the headline “Financial Stability Experts at the Fed Turn a Wary Eye on Commercial Real Estate,” while the Washington Post offered “Fed Report: Bank Stress Top Concern for Financial Stability.” The Financial Times’ take on the report focuses on “Federal Reserve Warns of Credit Crunch Risk After US Bank Turmoil” and CNBC reported “Worries Linger About Financial Stability Following Bank Rescues, Fed Report Shows.”

While a survey of “Salient Risks to Financial Stability” included in the Fed report found an increase in concerns regarding stress in the banking system and in commercial and residential real estate sectors, the framing of the stories in the financial press – and the different perspectives offered by the news outlets – can serve to confuse the public more than it informs.

Choosing to highlight issues in the banking system as the key takeaway of the report ignores other relevant findings in the Fed report, including a lowering of concerns regarding inflationary pressures as well as easing fears that the ongoing conflict in Ukraine presents risks to financial stability.

In a world where information comes fast and furious and an increasing number of people get their “news” from scanning headlines and hot takes from social media “influencers,” it is easy to get confused about what is really going on in the financial system. By highlighting the most dire findings of the report, many media outlets seem too be following the old newsroom adage of “If it bleeds, it leads,” meaning the more sensational or tragic stories received bigger play which can obscure the wider context.

In the competition for “clicks” and “engagement,” the duty to inform readers, listeners and viewers objectively and comprehensively can fall by the wayside, providing the public with a skewed perspective on the state of the world and what it means for their lives.

This isn’t to say that media outlets should sugar-coat the news. But they shouldn’t offer a poison pill either.