CNN: Perception Trumps Reality with Recession
Perception is important, but when it comes to economic issues, perception isn‚Äôt necessarily reality ‚Äď unless you‚Äôre CNN Senior Business Correspondent Ali Velshi. Then perception supersedes factual definitions.
‚ÄúThis is the latest CNN-Opinion Research poll, between October 12th and 14th. Get this: 46 percent of Americans think the economy is in a recession ‚Äď 46 percent. Nearly half of all Americans think that we're in a recession,‚ÄĚ Velshi said.
However, Velshi told viewers the economy isn‚Äôt in recession by textbook definition.
‚Äú[T]his is interesting, because by official standards, we're not in a recession,‚ÄĚ he said. ‚ÄúRecession is a sustained decline in economic growth. We haven't seen any decline in economic growth. We‚Äôve seen some decline, but not a sustained decline.‚ÄĚ
That doesn‚Äôt matter according to Velshi. He has incorporated the left-of-center mantra that suggests ‚Äúhow you feel‚ÄĚ trumps facts ‚Äď in this case, basic economic fundamentals.
‚ÄúBut, the bottom line is to most Americans, a recession is what it feels like to you,‚ÄĚ he said. ‚ÄúWhether it comes to your expenses, what you‚Äôre earning, how secure are you about your job, the value of your house ‚Äď things like that.‚ÄĚ
The media may have played a role in creating this notion the economy is in a recession. Coming up on the 20th anniversary of the 1987 ‚ÄúBlack Monday‚ÄĚ stock market crash, the media have repeatedly planted the seed suggesting such a crash could happen again.
‚Äú[T]he bottom line is I think that economists have realized that‚Äôs not how people see it,‚ÄĚ Velshi said. ‚ÄúSo, it‚Äôs what they call a sustained decline in economic growth. We‚Äôre not there because we don‚Äôt have a decline in economic growth. We‚Äôre still on the plus-side of economic growth. But, these things can accelerate very quickly and one thing that can trigger them ‚Äď in the past ‚Äď is high oil prices.‚ÄĚ
But, Velshi recognized the role the media play in perpetuating a recession.
‚Äú[A]nd talking about it [a recession (can trigger a recession)],‚ÄĚ Velshi said. ‚ÄúSo, don‚Äôt listen to me ‚Äď go spend whatever you were going to spend regardless of what I just said.‚ÄĚ
A more rational view of recession came from former Federal Reserve Chairman Alan Greenspan. Greenspan told CNBC correspondent Maria Bartiromo on the October 15 ‚ÄúClosing Bell‚ÄĚ ‚Äúthe odds of a recession are still less than 50/50.‚ÄĚ