Americans Get Their Economic Views From Headlines
We are a headline society. We have a low attention span and are constantly being pulled in many different directions. Whether it’s Lebron James, American Idol, Barack Obama, Tiger Woods, the Apple iPad, they all want your attention. As such, most Americans get their news and information these days from a headline. As soon as the headline is read, on to the next more interesting topic.
The problem with this style of information processing is that the headlines rarely provide us with economic reality today. Whether it’s the stock market cheerleading, Ben Bernanke defending hosts of CNBC or main stream media outlets like the New York Times, nearly every headline has an agenda. The agenda today is far too often that things are getting better or things are not as bad as they seem. After all, the Dow is nearly 11,000! (The Dow is arguably the biggest “headline” of them all).
Yesterday was a perfect example of headlines versus reality on the ground. Stocks rallied after the typical “surprise” economic data was released. While the headline retail numbers looked optimistic, if you dig into them into any level of detail, your optimism was immediately tempered.
During a break on typical work day, I ran into the property manager who oversees the large office building I work in here in Central Florida. The same company also owns and manages two other large buildings across the parking lot. He was telling us how they just lost an entire floor due to a bankrupcty – something along the lines of 30,000 sq. ft. Furthermore, he went on to mention a few other tenants, not as big, but definitely significant to the bottom line, were leaving as well. Note that this building is a fairly new, class-A office building in the area. Yes, these are developments today, in April 2010.
The lesson here is to make sure you’re getting your economic insight from more than just the headlines on CNBC segments, AP releases or NYT columns. Look into the data, or at least read analysis from credible people who are looking into the data. Then, combine the insight you gain with what you are seeing on the ground in the real economy.
Lastly, remember, the stock market isn’t economic reality – rather, it is people’s perception of economic reality. And, people’s perception of economic reality is primarily driven by the media. Invest with caution.