AP Clueless About Economic News
Associated Press reporters insist that American jobs are "disappearing into thin air." What's really disappearing is the AP's credibility in analyzing economic data.
Last week’s economic news started off on a pretty good note.
Many key reports — Monday’s Manufacturing Index from the Institute for Supply Management (ISM); Tuesday’s Orders Report from the government; and Wednesday’s Non-Manufacturing Index from ISM, to name just three — beat expectations. But Friday’s Employment Situation Report left us right where we had started.
The Associated Press’s economic reporting last week was another matter.
The wire service’s coverage contained clear errors of fact and obvious misunderstandings of the underlying data — enough of them to make it reasonable to wonder if the business reporters working at the self-described “Essential Global News Network” are up to their assigned tasks.
First, here’s an obvious bust, courtesy of Martin Crutsinger, as he covered the Orders report (bolds are mine):
The Commerce Department reported Tuesday that orders were up 1.1 percent in April following a 1.5 percent increase in March. Those gains followed big declines in January and March that raised concerns about how much pain manufacturing industries would feel from the severe economic slowdown hitting housing and the financial sector.
Yes, Crutsinger told us that March went up and down in successive sentences. In fact, it was February that declined (first 2008-labeled row at link).
This was far from AP’s worst error of the week.
In an unbylined article on ISM’s Non-Manufacturing Index, the AP’s reporter betrayed stunning ignorance of the meaning of a couple of key numbers:
The service sector grew at a better-than-expected pace in May but slower than in April, suggesting that higher prices for food and fuel may be crimping business in retail, entertainment, and agriculture.
… Another worrisome reading in the service report was that inventories rose 7 percent, while order backlogs fell 1 percent. If that imbalance persists, companies may have to cut production or buying as they reduce excess inventories.
That is not what the ISM report told us. Anyone who understands ISM’s reports would never have written the bold sentence above.
If the unnamed reporter had bothered to scroll down the report, he or she would have seen the following:
Inventories
ISM’s Non-Manufacturing Inventories Index registered 54 percent in May, indicating that inventory levels grew in May after contracting in April. …
Backlog of Orders
ISM’s Non-Manufacturing Backlog of Orders Index contracted in May. The index registered 49 percent, 1 percentage point lower than the 50 percent reported in April. …
ISM’s report stated that more respondents in May said that their inventories were increasing than said they were decreasing (in April, more were reporting decreases than increases). That’s it. The 7% change revealed nothing about the actual dollar amount of increase or decrease in inventories. Anyone even remotely familiar with business and commerce would know that a seasonally adjusted increase of 7% in inventories in one month across the entire economy would be cause for huge concern.
The point is similar with orders backlog. Barely more respondents in May said their backlogs had declined. Again, the result had nothing to say about their dollar amount.
The two results taken together aren’t an indication of “imbalance.” There’s nothing necessarily “worrisome” about them. What’s really worrisome is that an AP reporter knows so little about what he or she is covering.
Finally, on Friday, reporter Jeannine Aversa repeated the error she has made for several months running of treating seasonally adjusted jobs data as if it reflects what actually occurred in an individual month.
Aversa’s tone was especially shrill, even for her:
Pink slips piled up and jobs disappeared into thin air in May as the nation’s unemployment rate zoomed to 5.5 percent in the biggest one-month jump in decades. Wall Street swooned, and the White House said President Bush was considering new proposals to revive the economy.
… Help-wanted signs are vanishing along with jobs, so the unemployment rate is likely to keep climbing, a government report indicated.
However, BLS’s best estimate is that 648,000 more Americans were actually working in May than were working in April:
Aversa should have told us that May hiring was disappointingly low for the fourth straight month, leading to a net loss in seasonally adjusted jobs of 49,000. Her claims that “pink slips piled up” and of “jobs disappearing into thin air” are patently false.
Aversa’s “vanishing help-wanted signs” assertion probably doesn’t stand up in the real world either. Though the Conference Board’s Help-Wanted Advertising Index has been trending downward, the fact remains that as of April, the most recent report available, 35% of labor markets were reporting rising help-wanted volume. That’s hardy “vanishing.” I’ll bet those markets also have plenty of non-vanishing and quite visible help-wanted signs.
What’s really vanishing is the reliability of AP’s business coverage.
Many of AP’s subscribing news outlets accept and run the wire service’s reports on business and the economy without questioning them. If AP gets it wrong, much if not most of the country will be misinformed — and AP is all too frequently getting it wrong.
That’s unacceptable.
Tom Blumer owns a training and development company based in Mason, Ohio, outside of Cincinnati. He presents personal finance-related workshops and speeches at companies, and runs BizzyBlog.com.
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14 Comments
1. David Thomson:“If AP gets it wrong, much if not most of the country will be misinformed….”
And this means, of course, that most voters will cast their ballots for Democratic Party candidates. By all rights, Democrats should be terrified of facing voters because of their restrictions on oil exploration and new power plants. They are, for all practical purposes, under the control of the radical environmentalists. In a fair world, the Republicans should win by landslide margins in November. The MSM, however, is distorting the general public’s understanding of economic issues to the point of utter madness.
Jun 9, 2008 - 11:22 am 2. Larry:David, it doesn’t help when the Republican presidential candidate is also a radical environmentalist. He could, if he chose, make fuel prices the issue that he could ride handily into the white house with. But he won’t.
Jun 9, 2008 - 12:00 pm 3. David Thomson:“David, it doesn’t help when the Republican presidential candidate is also a radical environmentalist.”
That is correct. John McCain is hurting his own campaign with his “good person” anti-intellectualism concerning environmental issues. Still, he is the lesser of evils. McCain may indeed leave something to be desired on these matters—but he is not Al Gore, Jr. Also, this should not deter other GOP candidates from pushing for more realistic energy policies. The Republicans admittedly sometimes fall short. They deserve perhaps no more than a C grade on energy issues. Democrats, however, have richly earned a F!
Jun 9, 2008 - 12:23 pm 4. Ten:Whether or not API is as much a fraud as the wires is not at question. What is at question is (1) if that truth absolves the ostensible political right from fairly and fully reporting (and acknowledging) the depth of the monetary crisis and resultant economic slump, and (2) if the right not doing so, which it is clearly loathe to do, constitutes its service to conservatism.
That truth is also self-evident: The popular right utterly fails to acknowledge the macroscopic results of the fiat currency economy, the data about which dwarfs this little snippet in space and time, Blumer. Because a full analysis shows just what a dire situation the socialization of America and the concurrent devaluation of its currency hath wrought.
The next complete, objective, honest analysis by the right of the entire financial mess facing this country as the result of decades of debt-making and debased currency will, sadly, be among the first. A real shame, given at the least what Jefferson observed about bankers.
Jun 9, 2008 - 12:47 pm 5. heather:ummm. Jobs ARE disappearing. MEDIA jobs are disappearing. MSM jobs are disappearing.
The badly educated, solipsistic habitues of the media world are actually being ‘honest’ in the sense that they are as usual, talking about themselves and their ‘feelings.’
Jun 9, 2008 - 1:34 pm 6. Media Mythbusters Blog » Blog Archive » Media Bias Roundup - 06/09/08:[...] Pajamas Media – AP Clueless About Economic News [...]
Jun 9, 2008 - 4:20 pm 7. jeff:I do some commentary for radio and tv. It is amazing to me how “reporters” know little or nothing about economics. I was on a national radio program Friday, and the person reporting the stats obviously colored it for Dems. Kept raving how the unemployment rate was up .5%. Of course, when you actually look at the numbers it’s seasonal. More teens looking for jobs-school is out DUH.
I am a Republican, but I try to be party neutral in commentary. It is an economic fact that taxes slow economies. It is an economic fact that government solutions to things are not as efficient as free market solutions. It is an economic fact that governments cannot invest, they SPEND.
Reporters need to take a good microeconomics course.
Jun 9, 2008 - 4:32 pm 8. AJ:The AP is as dangerous in this election as Obama himself. Look at the MSNBC top story tonight:
http://www.msnbc.msn.com/id/25063183
Why is McCain to blame for this? Why is Obama not to blame equally? Are either to blame? Is it Bush? The Democrat led do-nothing congress? Or just natural?
But too many Americans get 100% of their news from quick headlines and never think, just use emotion. I call them leftists. They could care less about America, real issues or facts. They just spew hatred—and vote for the Empty Suit.
VERY good article. I’d send to my liberal friends but they’re pretty much illiterate or ignorant.
Jun 9, 2008 - 5:12 pm 9. BizzyBlog » Latest Pajamas Media Column (’AP Clueless About Economic News’) Is Up:[...] It’s here. [...]
Jun 10, 2008 - 3:38 am 10. always right:As discussed elsewhere, the ‘disappearing seasonal jobs’ have more to do with the minimum wage hike. Yep, you can thank the very first act of this ‘do-nothing’ congress.
Exactly the result the opponents of such wage hike predicted.
Jun 10, 2008 - 1:45 pm 11. Larry Rasczak:It is amazing to me how “reporters” know little or nothing about economics
Well first I have to point out that the people at CNBC (unlike the other networks) DO know economics. Erin Burnett and Becci Quick probably know more about economics than the entire campaign staff’s of both Presidental Candidates, and half the economics professors in America, combined.
The problem is, that with notable exceptions like Ms. Burnett, Ms. Quick, their co-workers at CNBC, and a very few others, most reporters know little or nothing, PERIOD.
I encourage everyone to check out any major college’s website and spend a little time looking over the course catalog. You will see that it is not just possible, it is EASY to get a degree in “journalisim” or “communications” without taking ANY “real” classes in ANYTHING at all! You can get one of these degrees without actually having to learn anything about anything. It is no wonder the MSM is wrong so much… NONE of them know what they are talking about.
Jun 11, 2008 - 9:16 am 12. BizzyBlog » Is the Associated Press Up to the Task of Reporting on the Economy?:[...] This column was posted at Pajamas Media on Monday afternoon with the title “AP Clueless About Economic [...]
Jun 11, 2008 - 10:21 am 13. BizzyBlog » FU, AP:[...] I’m going to speculate that this BizzyBlog item, preceded by a couple of days at at Pajamas Media, along with a more comprehensive critique by Steve Boriss a few weeks earlier, might have [...]
Jun 16, 2008 - 7:29 pm 14. Joe:“But too many Americans get 100% of their news from quick headlines and never think, just use emotion. I call them leftists.”
I call them hockey moms.
Sep 17, 2008 - 8:50 pm