Resilient Economy Throws Naysayers a Curveball

They say misery loves company, but what it really needs is more attention – especially from the media. Not the dictionary definition of a state of suffering and want or great unhappiness and emotional distress but the Misery Index — a measure of the economic distress felt by consumers due to the risk of (or actual) joblessness combined with an increasing cost of living. The misery index is calculated by adding the seasonally adjusted unemployment rate to the inflation rate.

Given the air of impending economic doom that continues to seep into business and financial reporting, one might assume a recession is imminent, if not actually underway. The thing is, the Misery Index isn’t that miserable right now. In fact, the index sits at a level that is lower than 83% of the months since 1978. Yet consumer confidence – according to the University of Michigan’s Index of Consumer Sentiment – has only been lower 8% of the time during the same period.

Either math is fake or there is something else at work. Since we can all agree that 2+2=4, there has to be another explanation

In our mediated world where we are bombarded with information all day and long into the night, it can be next to impossible to separate the economic chaff from the mega-bushels of digital wheat. And that’s the something else.

In a 24/7/365 news cycle, media platforms need to pump out as much content as possible as quickly as possible. While that provides the public with a steady supply of “news,” it leaves little time for perspective and nuance. Wanting to reach as broad an audience as possible and keep that audience interested, financial reporters and editors cannot be indifferent to the analytics that drive journalism. As much as readers/listeners/viewers tell survey takers they want to see/hear/read “good news,” happy stories don’t generate digital engagement with the reliability and consistency of bad news.

Echoing the old newsroom adage “if it bleeds it leads,” snappy headlines foretelling an impending economic downturn are almost guaranteed to generate more clicks than an “all quiet on the economic front” story will. Add to that the bandwagon effect of pack journalists hyping inflation interest rates, consumer confidence and any other economic malady they can think of, it is no surprise consumers are less confident and more fearful about the state of the economy.

The latest concern centers on the yield curve – a measure that shows that long-term interest rates are lower than short-term rates – and what has been a classic indication of a recession.

But the yield curve has been inverted for a year now and the unemployment rate and the cost of living continue a race to the bottom and even the Federal Reserve Board has taken its foot of the interest-rate gas pedal.

This is not to say there will never be a recession. Economies run in cycles – boom and bust cycles in economic shorthand – and someone, somewhere always thinks we are about due for another one. The difference is today they can tell the rest of the world about it and depending on their motivation, determination and amplification, that can add up to a lot of people. In a world where it is easier to accentuate the negative, that also makes it harder for good news to get to the top of the search engine results page.