don't believe holiday doom-and-gloom pronouncements
Paul Farhi of the Washington Post has an interesting take (“We Told You Shopping Was Down, and You Bought It,” Jan. 5) on the media’s doom-and-gloom economic pronouncements about lackluster holiday spending. Farhi writes that the gloomy holiday spending stories, practically an annual tradition, are based on the faulty assumption that retail shopping receipts are an accurate barometer of U.S. economic performance.
What these stories rarely note is that consumer spending typically is pretty stable, even in a recession. Thanks to population growth and inflation, personal consumption tends to rise even when the economy is just treading water. When a recession hits, it’s not because Wal-Mart had a lousy Christmas; it’s usually because of a decline in business investment and profits, and a deterioration of the trade balance.
Even the shopping figures that the media reports are often woefully incomplete. More accurate retail figures, incidentally, should be available sometime this month from the Department of Commerce, but won’t get the same degree of coverage as this story gets during the holiday season itself — it’s not “timely” anymore, and the media has turned its attention to something more interesting. But even the Commerce Department figures, Farhi writes, only take into account about 2/3 of all retail spending.
The truth, says Farhi, is that holiday spending at the larger retailers has actually been up for four of the past five years, when all the tallies are in.
The business press pegged the 2002 holiday shopping season the “worst in 30 years” not because sales declined, but because sales increased by a smaller-than-expected percentage.
So what’s up, then, with all these doomsday stories? Farhi writes:
The retail-in-December story is, I think, irresistible to the media for three reasons.
First, tradition. The media are creatures of habit, reflexively recycling the same seasonal chestnuts. The holiday-shopping story is a comforting staple of the season.
Second, retailers — who are among the biggest advertisers on radio and TV and in newspapers during December — are more than happy to encourage such stories. Media coverage of shopping is yet another reminder to the masses that it’s their patriotic duty to get out there and spend.
Third, and perhaps most legitimate, the holiday shopping story seems like news you can use. Almost everybody shops in December; ergo, almost everyone is interested in the behavior of others. These stories offer the consumer a vague yardstick for measuring personal well-being. Am I better off compared to my fellow American shoppers? Am I doing better compared to this abstraction called the economy? Am I doing better than last year? The shopping story purports to answer these questions.
Even though it never does.
The media has tremendous power to help shape “reality.” Their reporting of some angle of a story helps make it “true.” (And this is especially the case when it’s the mass media spreading the story, rather than isolated outlets.) If the media say that the economy is down and that people are cutting down on spending, that reporting helps make it true, because others — individuals and businesses — then act on that information. To make broad pronouncements about the state of the economy based on faulty information is dangerous, and an abuse of media power and responsibility to the truth.