Making Sense of the Economy

By Andre Jackson
April 1, 2009

You hear the question in news meetings, at the mall and even during Sunday sermons: When will the economy turn around? More importantly, when will we know that the economic ship of state has done a 180 and is again sailing, however erratically, toward prosperity and growth?

There are about as many opinions about how to discern the telltale inflection point as there are economists making the prediction. Complicating things are the economic and business indicators that burst onto the scene seemingly daily, capturing headlines and eyeballs, at least for a fleeting moment. Given the staccato fire of economy news releases, it’s no surprise that many in our audiences are: 1) Unsure what to make of it all, and, worse, 2) wearying of the parade of bad news that’s assailed them for more than a year.

When people tune out and turn off to business and economic news, that’s not good for the business of journalism. Worse yet, it’s not good for readers and viewers who have a vested stake in the global economy through their jobs, investments and retirement plans.

So how can we help viewers and readers keep their eyes on the economy and gain a real understanding of how it’s doing? More importantly, how can we help them take in the data and discern on their own when things might finally be taking a turn for the better?

I’ll deal with this topic over the next couple of columns, news and economic conditions permitting of course. In this installment, let’s look at market news.

For starters, we can help readers make sense of it all by explaining often that measuring the economy’s pulse is a lot more involved than just watching the Dow or S&P 500. Many of us know people who routinely watch only one, and not the other. Both measures are useful in their own ways, but how many readers could tell you how and why?

I wonder how many investors or market-watchers know that only 30 stocks comprise the Dow Jones Industrial Average. We won’t even pose the question about the Nasdaq.

Part of our job as business journalists is to impart that kind of knowledge in meaningful ways. We can do it through always including context grafs in news stories and by parking insightful explainers and definitions in permanent homes on our websites.

By explaining what the various market indices represent, we take the first step toward helping audiences gain a deeper perspective on the indices and their place in the economy. What’s the S&P 500 intended to capture as a market measure? Ditto for the Wilshire 5000? Which ones are true indexes versus an average?

Providing this sort of information helps readers put the weekday gyrations of the stock markets in proper perspective. It sounds ominous, but what does a single day’s 300-point fall (or rise) in the Dow really mean in the bigger picture? In a narrow sense, it may push out readers’ faraway retirement date a bit further. Beyond that, it’s important to tell people that their market-watching horizon should encompass a lot more than a single day’s trading.

We can all recite the mantra to “take the long view” on investments and that’s often true, as far as it goes – at least for investors who don’t have to cash out soon. How can we build on that knowledge, though?

In my view, we as business journalists would do well to gently, and consistently, remind audiences that markets are a lot more than a spectator sport played out in global stadiums. To use a sports analogy (and I’m far from a sports fan, so bear with me), the real markets game is played across an entire season, not a single day. In this game of dollars and returns, we should tell readers often that trends are set across the course of weeks, months, years and decades – not days. Some observers say that a fiscal quarter or more needs to pass before an economic or market trend can be discerned. It stands to reason that three months’ observation of a trend line provides a lot more data points to analyze things than a single week, or day.

The step-back view can co-exist, I believe, with the journalistic imperative to report real-time market news given the frenzied pace of trading around the world. So what can we do differently to flesh out the contextual piece?

Always looking for the step-back angle is a good start. Think about book-ending the workweek with curtain-raiser stories on Mondays that set up market openings by noting what other economic factors might be in play. These stories should also recap previous trading and what’s happening in already-open markets around the globe. Similar stories should be written – or pulled off the wires – to help readers make sense of it all at week’s end.

To help provide pacing and an alternative storytelling form, context stories should be paired wherever possible with informative graphics or video that provide quick bites of data and insight. Even readers who’re habitual skimmers should have the chance to learn from info-packed bullet points, refers and teasers that will hopefully whet their appetite for deeper offerings.

Doing a bit more (often with less space or air time) is no small feat in today’s environment of constrained resources. Even so, we owe it to our readers to help them understand an increasingly complex world. And working smarter doesn’t always require more space; it just requires more thinking in my humble opinion. And, yes, it’s likely a zero-sum game today – every second of air time or column inch added has to be balanced by a trim somewhere.

Lastly, we all know that there’s much more to reading economic tea leaves than just following the markets. The next column will look at other indicators that can be stirred into the analytical stew to help readers make sense of it all.

A few sources for better understanding the economy:

• www.seekingalpha.com – An ever-changing collection of economic essays


• www.dismalscientist.com – A broad-ranging portal site run by Moody’s Economy.com


• http://blogs.wsj.com/economics/ -- The Real Time Economics blog at online.wsj.com provides thought-provoking insights

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Copyright © 2009 Donald W. Reynolds National Center for Business Journalism