Fox News is alone in casting a negative light on the latest weekly jobless claims update from the Department of Labor, continuing its false narrative that positive labor market developments are somehow linked to workforce dropouts amidst a weak recovery. In doing so, the network completely ignored that the average number of new unemployment claims is at its lowest point in nearly six years.
On August 8, the Department of Labor released its weekly jobless claims report. The data show a marginal week-to-week increase on jobless claims, increasing 5,000 from the previous week to 333,000 for the week ending August 3. This slight increase, less than two percent, is less than many economists had anticipated. Just one week after the weekly unemployment claims figure hit a five-year low, the rolling average for the past four weeks is at its lowest level since November 2007.
From Maddow Blog:
Other news outlets highlighted that despite a slight uptick the single week jobless figures remained near the five-year low reached last week. Most highlighted that the continued, steady decline in unemployment claims put the rolling average at its lowest point since before the recession. On the August 8 edition of MSNBC's Morning Joe, CNBC correspondent Kelly Evans called the news "a big beautiful report" and stated that the jobless report showed that "the pace of layoffs has slowed."
Fox opted instead to portray the latest Department of Labor report as yet another indication that the weak economy is driving discouraged workers out of the workforce. On the August 8 edition of Fox News' Fox & Friends, Fox Business contributor Nicole Petallides recognized that jobless claims have "been in the right direction overall," but failed to recognize landmark achievements of the past few weeks before launching into an unsubstantiated claim about workforce participation, particularly that the labor force is "dwindling":
Fox has a long history of downplaying positive economic news while focusing on negative spin. Completely ignoring positive employment trends is standard for the network. Just last week, Fox entirely failed to cover the Department of Labor claims report that established a new five-year low.
Fox Business host Stuart Varney falsely claimed that policies outlined in President Obama's housing speech will inflate a new housing bubble by "coercing" private banks to provide low interest rates and easy money to unfit borrowers, ultimately setting the stage for another financial collapse.
On the August 7 edition of Fox News' America's Newsroom, Varney argued that the president's call to wind down government involvement in Fannie Mae and Freddie Mac, perhaps dissolving the two mortgage giants altogether, was in fact a ploy to over-regulate private industry. According to Varney, Obama eventually planned to force other banks to lend to the "poor credit borrowers" currently served by Fannie and Freddie. Varney and Fox host Heather Childers agreed that it was a policy of lending to so-called "poor credit borrowers" that caused the financial collapse more than five years ago. They went on to state that the president's proposal would set the precedent for another crash.
Varney continued his attack on the president's housing initiatives on the August 7 edition of Fox Business' Varney & Co. with senior legal analyst Andrew Napolitano who agreed that the president "wants to transform them [Fannie Mae and Freddie Mac] ... into something more sinister" through federal regulation of the banking industry for his own political gain.
Fox is once again attacking the president for policies he does not actually support. Furthermore, they are once again blaming the financial collapse on bad borrowers who were extended loose credit through government regulation, even though economists conclude otherwise.
On August 6, President Obama spoke at Desert Vista High School in Phoenix, Arizona, on the merits of "responsible homeownership." The president outlined a vision to build upon stable growth in the housing market without burdening American taxpayers with the failures of risky borrowers and lenders. From the speech:
We've got to give more hardworking Americans the chance to buy their first home. We have to help more responsible homeowners refinance their mortgages, because a lot of them still have a spread between the rates they're paying right now on their mortgage and what they could be getting if they were able to refinance.
And we've got to turn the page on this kind of bubble-and-bust mentality that helped to create this mess in the first place. We got to build a housing system that is durable and fair and rewards responsibility for generations to come. That's what we've got to do.
The president specified that his plan will not bail out risky lenders and borrowers at the expense of the public, and that it would take steps to curtail some of the rampant market speculation that helped drive the housing bubble before the 2008-09 crash. The president indicated support for winding down the two government-backed mortgage giants; meanwhile, legislation to gradually dissolve Fannie and Freddie over the course of five years is already proceeding through the House and Senate.
President Obama also outlined a multi-step program that would allow borrowers to refinance at today's low rates, make more credit available to well-qualified borrowers, rebuild hard hit communities, and ensure affordable rent to families who opt not to buy a home.
The president also commented on the prospect of immigration reform providing a boost to the housing industry. According to The New York Times, a study by the National Association of Hispanic Real Estate Professionals estimates that the Senate's bipartisan immigration reform bill could generate up to $500 billion in mortgage lending to new citizens and documented legal residents.
Contrary to Varney's continued accusations, economists argue that loose private sector lending, rather than government-sponsored loans to "poor credit borrowers," precipitated the housing market's collapse. While Government-Sponsored Enterprises (GSEs) including Fannie Mae and Freddie Mac did contribute to the market's overall instability, a Brookings report finds that "Fannie and Freddie did not catalyze the market for subprime MBS [Mortgage Backed Securities]; rather, they started to hold such mortgages in the pools they purchased, perhaps because of shareholder pressure or to regain market share."
According to Brookings senior fellow Alice Rivlin, it was the private sector's "extraordinary decline in lending standards" that caused the crisis, and GSEs do not deserve the blame. Dean Baker of the Center for Economic and Policy Research notes that GSEs began buying junk bonds "late in the game" as a response to pressure from private market, citing a Moody's investor document. Data comparing GSE lending to the private sector indicates that GSEs took fewer risks than the private sector.
In an effort to downplay the necessity of increasing the minimum wage, right-wing media figures have forwarded the notion that minimum wage jobs are primarily for teenagers and are a "stepping stone" to higher paying future employment. However, the prospects for upward mobility among minimum wage workers remain grim.
Rush Limbaugh accused the Obama administration of "cooking the books" to show increased economic growth during the last five years, a claim that completely ignores the facts and rationale behind GDP revisions.
On July 31, the Bureau of Economic Analysis (BEA) released its report on U.S. gross domestic product, which showed the economy growing at 1.7 percent for the second quarter of 2013. In its report, the BEA noted that a "comprehensive revision" in calculating GDP was implemented "for improving and modernizing its accounts to keep pace with the ever-changing U.S. economy." The revisions generally resulted in upward estimates for national GDP, in addition to higher than previously estimated annual growth rates.
Reacting to the report and revisions on his radio show, Limbaugh forwarded the notion that the Obama administration was "cooking the books," claiming that the revisions were only implemented to paint a rosier picture of the economy under Obama.
Limbaugh's suggestion has no basis in reality.
While Limbaugh claimed that upward revisions were only applied for years during the Obama administration, the BEA clearly notes in its report that GDP figures dating back to 1929 were also recalculated:
For 1929-2012, the average annual growth rate of real GDP was 3.3 percent, 0.1 percentage point higher than in the previously published estimates. For the more recent period, 2002-2012, the growth rate was 1.8 percent, 0.2 percentage point higher than in the previously published estimates.
Additional revisions were made to the most recent five years of data to reflect new and better data sources that have emerged since initial estimates. But while Limbaugh falsely suggests this was done solely to improve the numbers for the Obama administration, revisions applied to 2007 through 2012, including two full years prior to Obama's first inauguration.
Beyond Limbaugh's blatant disregard for the facts about the timeline of the revisions, he also failed to realize that revising the formula for calculating GDP is a routine procedure intended to help the government more accurately track economic development over time. According to the BEA, "comprehensive revisions" are "carried out about every 5 years" to more accurately reflect the economy. And in an interview with Bloomberg News, Brent Moulton, associate director for national economic accounts at the Bureau of Economic Analysis, stated, "Despite the conceptual changes, we have not rewritten economic history."
Furthermore, the BEA has maintained a high degree of media transparency regarding the revisions. In an April 26 Wall Street Journal article, BEA Director Steve Landefeld was forthright with his agency's upcoming analytical revisions. From the Journal:
At the end of July, when the bureau issues its first cut at second-quarter GDP, it also will be completing a sweeping benchmark revision of GDP estimates going back to 1929. Mr. Landefeld has presided over a number of benchmark revisions, which happen every four to five years. He said the 2013 changes, which will introduce the capitalization of business and government spending on research and development, are up there in significance with the 1999 revisions, when computer software first was included in GDP.
Right-wing media often engage in trutherism over positive economic reports, consistently arguing that the Obama administration is attempting to mislead on the state of the economy. Limbaugh only adds another chapter to this series.
Fox News declined to air President Obama's economic speech, despite offering a pre-rebuttal of his agenda.
On July 30, President Obama was scheduled to address his agenda for sustainable economic growth and recovery at an Amazon shipping facility in Chattanooga, Tennessee.
On the July 30 edition of Fox News' America Live, host Shannon Bream and guest Dana Perino chastised the president's previous economic proposals as a preview to his upcoming speech. Perino stated that the Obama administration's "speeches end up being like cotton candy, you know what, melts on contact? So I give them a C minus when it comes to the content of their speeches."
Shortly thereafter, Bream informed viewers that those interested in the speech could follow it on Foxnews.com.
As the speech started, rather than airing the president's remarks, Fox brought on guest Chris Stirewalt to continue the network's general attack on his policy proposals without any context from the actual speech. Stirewalt explained that the speech offered little pragmatic solutions, and was solely based around the president's alleged desire to show he is willing to compromise.
Earlier in the day, Bream questioned on Twitter whether anyone was "still listening" to the president on the economy.
Fox Business provided a platform for a corporate lobbyist with clients in the fast food industry to dismiss striking workers' demands for higher wages without disclosing his industry ties.
Labor organizers in seven cities across the U.S. planned the largest employee walk out of the year for July 29. Thousands of employees in Kansas City, St. Louis, Chicago, Milwaukee, Flint, Detroit, and New York City will take part in what is potentially the largest fast food worker mobilization in history demanding better wages and stronger benefits from some of the country's largest and most profitable corporations.
On the July 29 edition of Fox Business' Varney & Co., host Stuart Varney interviewed Richard Berman of the Employment Policies Institute to provide a critical analysis of the walk outs. Berman dismissed the idea of raising fast food employee wages, claiming that the hike in pay would result in lower employment:
BERMAN: At $15 an hour many, I won't say a majority but many fast food restaurants are out of business, the business model just does not support those kind of wages. If people are feeling that they are not being paid adequately, then they have got to find a job someplace else
Berman, a corporate lobbyist, was allowed to provide this input without disclosing his organization's ties to the fast food industry. According to Citizens for Responsibility and Ethics in Washington, the Employment Policies Institute is one of many front groups associated with Berman which provide political cover for clients in the restaurant, hospitality, alcohol, and tobacco industries. Berman specializes in a so-called "aggressive media outreach" approach intended to "change the debate" in favor of major clients.
Leading up to his interview with Berman, Varney also promoted an advertisement by MinimumWage.com, an Employment Policies Institute subsidiary, which falsely claims that the federal minimum wage kills jobs and replaces workers with machine automation. Fox and other right-wing media outlets have a long history of championing false attacks on living wages. In April, Fox News used similar tactics to criticize a previous fast food worker strike in New York City.
In the wake of President Obama's economic policy speech, conservative media have refocused their attention to an outlandish comparison of Supplemental Nutrition Assistance Program (SNAP) participation and job creation during the Obama administration, ignoring the fact that most SNAP participants are either children or are employed and that the program is considered an effective form of economic stimulus that can help create jobs and alleviate poverty.
In the four years since the minimum wage was last raised, right-wing media have forwarded a number of myths to prevent any possible increase in the future, which often directly contradict economic evidence.
Fox News is floating the idea that Detroit's filing for bankruptcy could lead to other cities following suit, a claim that economist Jared Bernstein calls "analytically incorrect."
On July 18, the city of Detroit filed for Chapter 9 bankruptcy protection, officially becoming the largest city in the United States to do so. According to USA Today, "The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities."
On the July 19 edition of Fox & Friends, Fox Business host Stuart Varney warned that Detroit's actions could cause a string of cities throughout the U.S. to also seek bankruptcy protection. Varney claimed, "This is a very big deal. Other cities might choose to go the Detroit route, because federal bankruptcy allows an escape route from these unpayable pension obligations."
Reacting to Varney's theory, co-host Gretchen Carlson stated:
This is the microcosm of the macrocosm in America. This is not just going to be Detroit, maybe Detroit is one of the worst, but this is going to be happening to big cities. You can't continue to do this. You can't continue to fund money that you don't have.
The speculation that Detroit's actions may set in motion other bankruptcy filings continued throughout the day. On America's Newsroom, frequent Fox Business guest Ed Butowsky continued sounding the alarm for municipal default, stating:
I mean this is going to happen all of the country, all over this United States if people don't start taking the proper measures.
Fox's narrative of a "domino effect" taking place in cities across the country ignores a number of economic facts. In an interview with Media Matters, economist Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, claimed Fox's suggestion that other cities will follow Detroit's lead amounts to nothing more than "scare mongering":
There will be no domino effect. There is a lot of scare mongering around that issue. That doesn't mean that every pension fund is in tip top shape, but the fact is that states and cities have been taking action to bring their costs in line and reduce their unfunded liabilities. In fact, between 2009 and 2011, 43 states have reduced the costs of their pension plans, including their unfunded liabilities, typically by modifying their obligations. Between 1970 and 2012, there were five city or county governments that defaulted. Okay, this is a rare event and for anyone to extrapolate from Detroit, which has faced extremely unique and tough economic challenges, to the rest of the country is analytically incorrect.
Major print publications relied heavily on the use of raw numbers when reporting economic issues, but these discussions of spending, deficit and revenue levels that rely solely on abstract and sensational numerical figures obscure otherwise important information.
A Media Matters analysis found since the beginning of 2013 three major publications -- The Wall Street Journal, The New York Times, and The Washington Post -- provided a majority of their coverage of the national budget (including figures on debt, deficits, spending, and revenue) without adequate context.
Reports highlighting gross spending, deficit, and revenue levels consistently failed to include relevant data such as the size of items relative to total federal spending or to GDP. Reports also consistently failed to put data into context with year-to-year comparisons.
For example, the newspapers' coverage of the national debt regularly failed to include the size of the debt relative to GDP, when doing so would have revealed that the United States does not carry extraordinary debt levels when compared to other developed nations. Discussions of the annual budget deficit regularly overlooked the fact that deficits have declined by more than half since peaking in FY 2009.
Many economists have noted that the media's reliance on enormous and abstract figures in economic reporting is little more than a scare tactic intended to drum up fears about the deficit. Dean Baker of the Center for Economic and Policy Research noted that the reliance on raw numbers also increases the likelihood that outlets will misreport information.
Opting to report national budget news in this way contributes to a general public misconception of debt, deficits, and the size and expense of spending programs. A Bloomberg News poll from February 2013 found that just 4 percent of Americans knew that the budget deficit was in decline. The same poll also revealed 34 percent of Americans believe the government spends between 2 and 20 percent of its budget on foreign aid, while another 31 percent believe foreign aid accounts for more than 20 percent of the budget. In fact, foreign aid and relief accounts for just 1 percent of the federal budget and has been in decline relative to overall spending for more than four decades.
This is not the first instance of media overreliance on inflated figures. Media Matters uncovered similar tactics employed by Fox News as it attempted to undermine Social Security and Medicare with the fear of "unfunded liabilities".