Jul 27, 2022 - Economy & Business

The meta-recession is (probably) over

Note: Within the headline or first paragraph of articles algorithmically determined to be about the economy. Data: Signal AI; Chart: Erin Davis/Axios Visuals

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.
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