Didja hear? The stock market is in really bad shape right now. According to CNN today, it tumbled 400 points! PBS said it dived. Investor’s Business Daily disagreed, saying it plunged.
Wow, we must live in very scary times, economically speaking. Except that unemployment is down, production is up, income is up, confidence is high, and…actually, this seems to be a pretty impressive economy. Indeed, the average American is probably pretty happy with the way things are going right now.
And that means things look pretty good for Republicans heading into the midterm elections. If you were the Democrats, you’d be pretty pissed about the Trump economy, because it will indeed cost a lot of votes in November.
So much so, Democrats might want to put the kibosh on that good economic news. But in these times, where can you get bad economic news?
Well, you can go after the stock market. Americans get terrified about tumbles, dives, and plunges. And the stock market delivers! Look at this! Just this morning, it lost 400 points! Can you imagine? 400 points!
The market will close today a little over 25,000. This morning it lost 400 points, which is a fraction of a fraction of its value.
The deal is that most people under 35 have no idea what the Dow Jones Industrial Average is, but they know it’s some stock market measure. Most people over 35 know what it is, but don’t know where it is, anymore.
So most people over 35 think a 400-point loss in a matter of hours is a terrible misfortune, because most people over 35 think the Dow is probably around 10,000 or 11,000 or something. When you tell them it’s over 25,000, a good number of us think “Wow, really?”
And most people over 35 haven’t necessarily decided for whom they’re voting. So let’s be clear: these “roller coaster” rides are designed to terrify older folks who think a 400-point drop means that their retirement savings are up in smoke.
A 400-point drop, while a definite loss, is a tiny fraction of the market’s overall performance. On a macro scale, it’s nothing. By the end of the week, today’s ~125-point closing loss will be erased and forgotten. Let’s look at the NASDAQ or the S&P500 indices, and you see more interesting information when compared as a whole.
But that’s just it—the media doesn’t care about those numbers; they continually stress the Dow Jones Industrial Average—not because it’s so accurate (it’s just an index), but because it’s so easily manipulated like this. And with the midterms not looking like the promised Blue Wave, well, the media need to do something to convince swing voters that the economy isn’t so wonderful. So here come the misleading headlines.
While Barron’s jumped the gun this morning, proclaiming that “everything falls apart,” (a claim they later retracted with a more sober and relaxed analysis), you could write headlines like this:
- Despite Talk of China Trade War, Dow Only Down 1%
- IBM, 3M, Caterpillar Stock Selloff Barely Dings Market
- As Predicted, Today’s Market Decline Barely Affects Powerhouse Economy
And you would write headlines like this, if Obama were president.