How’s the economy? Don’t ask the media.

Take a look at this graph. It’s a graph of a stock index. When you see this graph, do you think it’s from a time when the economy was good, or a time when the economy was bad?

Economy graph, going up

I’ll give you a hint…

No, actually not a hint, just my opinon. It looks to me like a graph from a decent economy. Up and up it goes. And in fact I think it is a graph you’d see in a really good economy.

One problem. It’s a graph of the Dow Jones Industrial Average over the last 5 days. Oops! That can’t be right. THE ECONOMY IS BAD!!!

Hmm… Or maybe we should re-think this. Maybe the economy isn’t so bad after all. But why didn’t you hear about that on the nightly news, or read about it on CNN.com? I look at CNN.com now and all I see are stories about people losing their jobs, health insurance, committing crimes. It doesn’t say anything about the economy possibly improving. And it never has. And that’s the problem.

The media keeps leading us to believe that the economy is getting worse and worse. This, in turn, makes us spend less money on everything, which means retail companies are making less money and their suppliers are making less money. So the retail companies and their suppliers have to lay off people. This gives more bad-looking statistics and stories for the media to report. If you then continue watching the media, it looks like the economy is getting even WORSE, so you start spending even LESS. There are names for phenomena like these, like feedback loop and infinite loop.

These loops need to be broken. We can’t continue doing this. We either have to stop paying attention to the media, or the media has to stop reporting the bad stuff and look at the good side. Since the latter seems unlikely, I choose the former. I don’t have a problem with ignoring the media. The hard part would be convincing everyone else to do the same.

In my opinion, the economy isn’t nearly as bad off as it looks. It never has been. Now it appears that investors are finally realizing this, as can be seen by the graph above. The only thing I can hope is that next week the media doesn’t convince them otherwise… or something.

  1. That graph looks awfully good. The thing is, though, people who already lost jobs already lost them, and thus have less and less money. So even though the Dow is on the way up, the Total Justified Desperation Level (TJDL) is still on the way up. Once the TJDL starts going down, we can call the recession done. Of course, the TMIDL (Total Media Induced Desperation Level) will still be fairly high for some time.

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