Monday, December 26, 2005


Does the State of the Publishing Business Affect the Way the Economy is Reported?

This story in Slate may show why the economy gets such poor coverage in the media. The article talks about how expensive it is in New York, and how many in the publishing industry can no longer afford to live there.

Back in the mid-late 1990s, publishing was booming as Internet bubble money was being spent wildly to get mindshare. Getting mindshare is really dumb. One of my favorite examples was with Noosh. When I included them in a TrendWatch survey back in the days when I co-owned TrendWatch, more than 60% knew the name "Noosh." Yet only 1% or 2% had any interest in considering use of their services. That means that they spent money getting 58% mindshare of people who weren't even marginal prospects for the most part... but I digress.... But the point is that they never realized that the Internet spending was a windfall, and not sustainable revenue....

... so the publishing business was booming, hence, most every story you read about the economy was just positive.

But today, inflation is low, interest rates despite the increases are low, household wealth is at an all-time high (that's net household wealth which means that credit cards and other debt are already excluded), the percentage of families with household incomes above an in-flation-adjusted $50,000 is at an all-time high, home ownership is at an all-time high, stock ownership now numbers 70% of all households, the civilian employed labor force is at an all-time high, the unemployment rate is smack in the middle of the full employment range of 4%-6%, an average of more than 70,000 net new businesses are being formed every month, and economic growth is running above post-WW2 historical averages.

How come we never read about that? Well, the New York Times, the supposed newspaper of record, is having an awful time of things from a fiscal perspective, Time Warner is still reeling from a disastrous merger with AOL, and most other publishing companies are having serious problems as they adjust to the electronic marketplace. Sure, there are individual titles that are doing well, but the mainstream titles are more often than not seeing page declines and circulation erosion.

They don't see a booming manufacturing business, and an exceptionally strong warehousing and transportation industry (the latter's profits have grown almost 3x faster than the supposedly ultra-profitable oil companies, who have historically been mediocre profit perfomers at best).

Has anyone noticed that the value of the currently traded Internet stocks is now higher than the value of the Internet stocks at the time of the Internet bubble?

Is the negative writing about such a strong economy media bias or is it something much plainer than that. The bias thing has been well-demonstrated in several studies, but I won't go into that here. I think it's more the fact that the editors and writers are involved in an industry that is undergoing gut-wrenching change... and many are unable to view the rest of the economy through anything other than that lens. Another problem is the lack of historical perspective, which I have written about many times in relation to the oil prices (gas has to get to $3.50/gal approximately to be a real high, and to $5.80/gal to have the same economic effect as the prices of 1979-ish; I only saw a couple of articles discuss this); now, everyone is screaming about how gold is at new highs now that it has broken $500. But I remember gold at above $800 in January 1980, and it would have to reach almost $2000 on an inflation-adjusted basis today to reach that same level.

As a researcher, I learned quickly to let the data speak for itself... but most business writers seem to be looking at their paychecks and the potential of pink slips and letting that get in their way. It always pays big dividends to read many things, often, from different perspectives (such as reading after you read, or read and, etc. ), but still let the data do its own talking.

Hi Joe,

Read your today's blog with interest as always. European doomsayers warn about the increased average household debt in America (a over 5% growth per year over the last 5 years) and warn that this cannot continue (much the same with the debt of America as a whole).
What is your view on this? (if the figures compute in your view)
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