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The Media’s Top 10 Economic Myths of 2006
Posted on 12/11/2006 04:24 AM | Link | Post Comment
Business & Media Institute, a self-proclaimed media watchdog funded in good part by Texas oilman Boone Picknes (and founder of a Seal Beach natural gas outfit,) ranked the "The Media's Top 10 Economic Myths of 2006" ...
Housing bubble seen as top 10 media myth:
Media myth: A U.S. housing slowdown means the market is crashing down and the rest of the economy isn’t far behind. As the housing market slowed from its red-hot pace, journalists resurrected talk of the “housing bubble,” which was now supposedly bursting. As a popular media measure of the economy, fluctuations in housing have drawn loads of attention.
On CBS, a housing report raised the specter of the Great Depression. Anthony Mason reported the forecast that “overall house prices will fall 3.5 percent next year.” “When’s the last time we saw that?” he asked economy.com’s Mark Zandi on the November 1 “Evening News.” “It’s unprecedented,” the economist replied, adding that “You’d have to go back all the way to the Great Depression to find a year in which house prices declined."
“Well, that noise you hear may be the sound of a bubble bursting,” said NBC's Natalie Morales on the July 21 “Today” show. ABC’s Jim Avila also remained stuck in the “bubble” mindset, focusing on a couple who were having trouble selling. He promoted a July 29 “World News Saturday” story: “Hard sell. Dream houses turn into nightmares as home sales drop and mortgage rates rise. How this couple and so many others are trapped in the real estate bubble.”
Truth: When something hits a record high, it's likely to come down eventually. That's exactly what the housing market has done – starting to come down after two consecutive record-high years. Sellers who had been getting top dollar now have to bring their asking prices down, making it more of a buyers’ market. But just because the market shifts to favor another party doesn’t mean the economy is crashing down. Federal Reserve Chairman Ben Bernanke said that “The downturn in the housing market so far appears to be orderly."
In fact, housing prices haven't decreased in all markets. Surprisingly strong data about the nation's residential real estate market was released on November 30 by the Office of Federal Housing Enterprise Oversight, in a report that said, “Nationally, home prices were 7.73 percent higher in the third quarter of 2006 than they were one year earlier.”
As the Business & Media Institute has documented, the media have been warning of a bursting housing “bubble” for almost five years. The allusions – sometimes explicit – to the tech-stocks bubble of the 1990s have been debunked, though some reporters continued to make the connection. That connection ignored the vast differences between stocks, which can fall to zero value in dire situations, and houses, which are goods that retain value over time.
To see all ten of B&MI's top media business myths CLICK HERE
Housing bubble seen as top 10 media myth:
Media myth: A U.S. housing slowdown means the market is crashing down and the rest of the economy isn’t far behind. As the housing market slowed from its red-hot pace, journalists resurrected talk of the “housing bubble,” which was now supposedly bursting. As a popular media measure of the economy, fluctuations in housing have drawn loads of attention.
On CBS, a housing report raised the specter of the Great Depression. Anthony Mason reported the forecast that “overall house prices will fall 3.5 percent next year.” “When’s the last time we saw that?” he asked economy.com’s Mark Zandi on the November 1 “Evening News.” “It’s unprecedented,” the economist replied, adding that “You’d have to go back all the way to the Great Depression to find a year in which house prices declined."
“Well, that noise you hear may be the sound of a bubble bursting,” said NBC's Natalie Morales on the July 21 “Today” show. ABC’s Jim Avila also remained stuck in the “bubble” mindset, focusing on a couple who were having trouble selling. He promoted a July 29 “World News Saturday” story: “Hard sell. Dream houses turn into nightmares as home sales drop and mortgage rates rise. How this couple and so many others are trapped in the real estate bubble.”
Truth: When something hits a record high, it's likely to come down eventually. That's exactly what the housing market has done – starting to come down after two consecutive record-high years. Sellers who had been getting top dollar now have to bring their asking prices down, making it more of a buyers’ market. But just because the market shifts to favor another party doesn’t mean the economy is crashing down. Federal Reserve Chairman Ben Bernanke said that “The downturn in the housing market so far appears to be orderly."
In fact, housing prices haven't decreased in all markets. Surprisingly strong data about the nation's residential real estate market was released on November 30 by the Office of Federal Housing Enterprise Oversight, in a report that said, “Nationally, home prices were 7.73 percent higher in the third quarter of 2006 than they were one year earlier.”
As the Business & Media Institute has documented, the media have been warning of a bursting housing “bubble” for almost five years. The allusions – sometimes explicit – to the tech-stocks bubble of the 1990s have been debunked, though some reporters continued to make the connection. That connection ignored the vast differences between stocks, which can fall to zero value in dire situations, and houses, which are goods that retain value over time.
To see all ten of B&MI's top media business myths CLICK HERE
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