The meta-recession is (probably) over
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Many things cause Americans to think we're in a recession, including rising gas prices and falling stocks. One key component is simply the amount of recession chatter in the media.
Why it matters: A surge in media recession stories can create self-fulfilling bad vibes, and increase the likelihood of an actual recession.
Driving the news: We're in a bull market for recession explainers right now, ahead of the the Federal Reserve's policy meeting today, and the release on Thursday of second-quarter gross domestic product (GDP) numbers. But we're well past the peak in recession stories.
By the numbers: Signal AI measured the number of economics stories with the word "recession" in either the headline or the first paragraph. (This story will definitely count.)
- In the U.S., there were 6,882 such stories in the week ending July 25, down 68% from 21,576 in the week of June 13, around the time that both gas prices and mortgage rates were peaking.
- Globally, the 19,828 such stories were also down 68% from the high point reached in the week of June 20.
How it works: Repeated information is more likely to be perceived as true. The U.S. public is a bit like the dog in the famous Far Side cartoon that only notices when its name is being mentioned.
- If we hear the word "recession" often enough, we're more likely to think that we're in one.
What's next: If the second-quarter GDP figure is negative, expect a massive increase in recession stories, pegged to the fact that the U.S. will have seen two successive quarters of negative prints.
- If GDP growth comes in above zero, however, there's grounds for hope that the media meta-recession is beginning to ebb.
