Why is it news that Ben Bernanke thinks the recession is over?
By Justin Fox, courtesy of TIME, at the Curious Capitalist Blog
Example #389 of why I’m never going to make it in the news business: Yesterday afternoon, TIME.com’s business editor, John Curran, recommended that I take a look at Ben Bernanke’s speech at the Brookings Institution. I glanced at the text, saw that it was an exact repeat of the speech he’d given at Jackson Hole in August, and thought, naaaaah. A couple hours later I read online that in the Q&A after the speech Bernanke had said the recession was "very likely" over. Which is what everybody and his brother—including, I thought, Bernanke—has been saying for weeks. No news there, either, I figured.
So I when I picked up my NYT this morning I was a little surprised to see Bernanke’s words highlighted on the front page (although at least the actual story was relegated to the front of the business section). Then I’m walking Curious Capitalist Jr. to school and I see the FT at a newsstand. The lead story: "Recession likely over in US, says Bernanke." When I got to work I checked the WaPo and WSJ. Front page of the WaPo: "Recovery Underway, Bernanke Suggests." Top of the "What’s News" box in the WSJ (with the actual story at the top of A2): "Bernanke: Recession ‘Likely Over.’"
Why on earth would all these newspapers, struggling to survive in straitened times, devote valuable space and reporting time to this non-news? It certainly can’t be because of Ben "the impact … of the problems in the subprime market seems likely to be contained" Bernanke’s brilliant record as an economic forecaster. Bernanke’s words also didn’t mark any sort of major change in his outlook. If Peter Schiff announced that he thought happy days were here again, now that would be news. Bernanke’s Fed, meanwhile, has been giving pretty clear signals over the past couple of months that it thinks the recession is ending but the recovery will be weak. Which is exactly what Bernanke said yesterday. So again, why all the coverage? I can think of three main reasons.
1) Bernanke is a powerful guy, and his opinions about the economic future, whether well-founded or not, matter. This is why Wall Street economists parse every utterance from the Fed—because they’re trying to get advance hints about future policy changes. Bernanke has actually tried to discourage such Kremlinology by being pretty straightforward about the Fed’s plans. But there are still lots of people trying to guess at his intentions.
2) We remain a society governed by symbols and rituals. I looked through Bernanke’s recent utterances and this does in fact appear to be the first time he has been so bold to say outright that the recession is probably over. When the Great Shaman of the economy announces that the Great Recession is over, tradition dictates that we must pay him heed. Or something like that.
3) Even in this new media age, when newspapers are supposed to devote themselves to endeavors of higher value than stenography of the utterances of some public official, it’s really tempting and easy just to go with stenography. Especially if you can be pretty sure that all your rivals will be doing it too. You wouldn’t want to look out of it by ignoring the biggest "news" of the day, would you?
