Media depression

Robert Samuelson:

The specter of depression stalks America. You hear the word repeatedly. Are we in a depression? If not, are we headed for one? The answer to the first question is no; the answer to the second is "almost certainly not." The use of "depression" to describe the economy is a case of rhetorical overkill that speaks volumes about today's widespread pessimism and anxiety. A short history lesson shows why.

The Great Depression of the 1930s -- the last time the term rightly applied -- was industrial capitalism's worst calamity. U.S. unemployment peaked at 25 percent in 1933; it averaged 18 percent for the decade. From 1929 to 1933, 40 percent of U.S. banks failed. People lost deposits; businesses and consumers lost access to credit. Over the same period, wholesale prices dropped a third, driving farmers and firms into bankruptcy. Farm foreclosures, shantytowns (called "Hoovervilles," after the president) and bread lines followed.

This was a social as well as economic breakdown. Our present situation bears no resemblance to this. In June, unemployment was 5.5 percent, slightly below the average since 1960 of 5.8 percent. It's true that banks and investment banks -- Citigroup, Merrill Lynch, Wachovia -- have suffered large losses. But on the whole, the banking system seems fairly strong. Although profits in the first quarter of 2008 were down 46 percent from 2007, they totaled $19 billion even after $37 billion set aside for loan loss reserves. Overall corporate profits are still running at a near-record annual rate of $1.5 trillion.

As yet, the present economic slowdown does not even approach the harshest post-World War II slump. The back-to-back recessions of 1980 and 1981-82 (as dated by the National Bureau of Economic Research) constituted, for most people, one prolonged downturn. Unemployment peaked at 10.8 percent in late 1982. In 1981 and 1982, housing starts were down almost 50 percent from their 1978 peak. From 1979 to 1982, the economy stagnated; output lurched down, then up and then down. There had been nothing like that since the 1930s.

...

The best explanation for the depression attitude involves two factors.

It is an election year and Democrats are eager to run against a depression whether we have one or not.

The second reason is the media is in a depression. The old saw about a recession is when your neighbor loses his job and depression is when you lose your job fits this discussion. Newspapers are in a sharp decline with layoffs on losses piling up and television news has been in decline since the cable news services arrived. Of that group Fox looks like the only winner.

Talk radio has been another winner as Rush Limbaugh's new contract demonstrates. While much of the public's attention has moved to the internet, the only real financial winner there so far is Google who links to other's content.

While a Democrat win this fall would lift the media depression somewhat it cannot change the dynamics of the media business.