As a health story, the coronavirus is horrifying in its randomness, in its exposure of systemic flaws, in its tragic human toll. As an economic story, the pandemic is overwhelming in its scale and abruptness — the nation’s massive business and production engine at a sudden halt. How can journalists, particularly those at smaller news organizations across the country, cover a macroeconomic story in Main Street terms?
Dave Skidmore and Mark Hamrick, both veteran economic observers, shared their perspectives with us in email interviews. Some key takeaways from their responses:
- Be skeptical — gut-check your sources and information. The economic conditions the country faces now are unprecedented, and it’s impossible to determine when and how the economy will bounce back.
- Much of the economic data we see lags reality, which is unfolding much too quickly. But journalists will get a picture of regional economic conditions soon, when the Federal Reserve releases the Beige Book next week.
- Keep an eye on local and state governments — they have limited funds and will likely be forced to cut services or lay off workers.
- Every good story has a personal connection. Journalists should try explaining policies and how they affect people — and like Skidmore and Hamrick, you may reach different conclusions.
- With the combination of low interest rates and massive lending, look for unintended consequences and whether there is sufficient oversight.
“The best economic and business journalism I am reading now describes ordinary life in extraordinary times,” wrote Skidmore, who recently retired as assistant to the Board of Governors of the Federal Reserve and now is a consultant to the Brookings Institution’s Economic Studies program. “One great example is a Washington Post piece that described the pandemic’s economic impact on a single block of Connecticut Avenue, about a five-minute walk from my house.”
Hamrick, the Washington Bureau Chief and Senior Economic Analyst for Bankrate.com, agreed: “To learn about local issues, which may parallel national trends, speaking to sources in businesses, both large and small, will help generate good story leads and threads. Ultimately, all of this is about personal challenges and victories best told by the individuals involved themselves.”
Unlike the uncertainty of 2008-2009, we know that this virus at some point will be conquered. Why can’t we assume that shops and restaurants and car dealerships and factories will simply reopen then?
Skidmore: What happens to the economy and the depth and duration of the downturn depend on what the novel coronavirus does and whether healthcare experts and providers and the government find effective ways to respond. Will social distancing succeed in checking the spread of the virus? Will the virus recede when the weather turns warmer? Will it come back in the fall? Will a vaccine be developed sooner rather than later? No one knows the answers to these questions yet. Until we do, no one can answer the economic questions.
The answers to the healthcare questions won’t come all at once, so likely the economy won’t bounce back all at once. For instance, it may be that, after a time, restaurants can reopen —but they will need to space out their tables and serve fewer customers until a vaccine is widely distributed. When car dealerships and factories resume operation will depend not only on the virus but also on demand for their products and that will depend on whether people have the money — and, importantly, the confidence — to resume buying things other than necessities.
Hamrick: While a variety of historical examples provide some context to the current experience, it is truly unprecedented in modern history. Many of us have lived through 9/11, a natural disaster such as a hurricane, tornado or flood, as well as the financial crisis and Great Recession, but nothing like this. Indeed, the current situation has at least something in common with all of those, but the notion of a 50-state (and beyond) disaster is remarkably new. Some workers, now doing their jobs from home, are unaffected. Millions of others have been furloughed or had their jobs and/or incomes cut. With furloughs, many will return to work when consumers can safely venture back into public and conduct business again.
Key to resuming something akin to business as usual will be preserving the solvency of businesses and individuals. This is one reason why the $2 trillion CARES Act intends to help keep enterprises alive so they can retain workers, while also providing direct cash assistance and boosting unemployment assistance administered by states.
Between monetary authorities (the Federal Reserve) and fiscal authorities (the Congress) and president, officials are playing a virtual game of Whack-A-Mole attempting to solve problems as they are identified. Passing legislation is one thing. It is another to execute new programs. Additional problems will be identified, requiring new solutions.
If you are a local reporter, what are the leading indicators you look for in your town or city that will give you an idea of how long a recession could last?
Skidmore: The regional presidents and Federal Reserve economists, like their colleagues everywhere, closely scrutinize aggregate data such as the unemployment rate and gross domestic product. But the data often lag reality, especially when reality is changing so rapidly. So, the Fed also relies, especially during times such as this, on anecdotal information from its unparalleled network of business and community contacts. …
The Reserve Banks compile the anecdotal information into a somewhat bland publication called the Beige Book, which describes economic conditions in different sectors in each of the 12 Federal Reserve districts. I have a feeling the next edition, due out April 15, will be anything but bland.
Local journalists also should watch for the economic impact on state and local governments. … Many have rainy-day funds but if and when those run out, we likely will see layoffs of state and local government workers, as we did in 2008-2009.
Hamrick: New unemployment claims data is probably the best snapshot demonstrating the number of workers losing their income and/or jobs. There are state figures on this.
Business trade groups at all levels may also help to generate story ideas, as well as advocacy groups or non-profit representing the interests of certain groups or individuals. Consumer advocacy groups are also good sources.
To learn about local issues, which may parallel national trends, speaking to sources in businesses, both large and small, will help to generate good story leads and threads. Ultimately, all of this is about personal challenges and victories best told by the individuals involved themselves. I would also think about opportunities for multimedia, meaning stories for print, images, video/television and audio/podcasts/radio. Here’s where a smartphone can help to create a treasure trove of content.
What are some of the biggest mistakes journalists can make when covering an economic story in the middle of a crisis like this?
Skidmore: Journalists should be appropriately skeptical of anyone who says they know what the future will bring — whether they are predicting doom or saying, “Don’t worry, everything is going to be alright.” Former Fed Chair Alan Greenspan once told me that the best question you can ask someone who seems too self-assured is, “How do you know that?” If they can’t answer that question credibly, then they don’t know what they’re talking about.
Another mistake some journalists made during the financial crisis was to pay too much attention to specific effects of the Fed’s and other government policies. They missed, or glossed over, the big picture. One example is that low interest rates helped wealthy stock market investors and hurt savers. … But most people wear more than one hat in the economy. Low rates helped them as homeowners and likely boosted their 401(k) accounts even as it hurt them as savers. More importantly, the big picture was that the low rates were aimed at supporting the job market.
Hamrick: When unexpected events are unfolding as they are now, it is important to remain agile and to seek out credible information while attempting to avoid intentionally misleading information, some of which may be related to attempts to spin. At the national level, the current White House briefings are a good example of the need for fact-checking. Local/regional/state officials must be held accountable as well, in part so that that public has access to credible information.
As a range of stories evolves, it will be necessary to avoid focusing on yesterday’s trends or storylines and to be prepared to move on to the developments today and tomorrow. During the financial crisis, one failure was the lack of reporting how individuals were faring and how policy failed to help everyday Americans. This is the question of balance, or fairness.
What are the regulatory measures journalists should examine when reporting on an economic crisis like this?
Skidmore: I am sure journalists and others will be doing a postmortem, with the benefit of hindsight, on whether regulation was tight enough before the pandemic struck. A banking regulator during the savings and loan crisis of the 1980s observed: “When the economic tide rolls out, you discover who has been swimming without swim trunks.”
The Fed and other central banks around the world have maintained low interest rates in the years since the 2008-2009 crisis, to support job creation and to prevent inflation from falling too low. (Too-low inflation makes it difficult for monetary policy to respond to downturns.) But low interest rates also encouraged many businesses to borrow a lot, leaving them vulnerable to the next downturn, and it is an open question whether regulators were forceful enough in leaning against that borrowing.
Hamrick: Broadly speaking, there are two ways to look at how new programs are administered. The first is to see whether they are achieving success, or well thought out. Is it working as expected? Are there new problems popping up, or created? Are their particular beneficiaries or casualties? Is there sufficient oversight to guard against self-dealing?
Another is to scour the landscape for unintended consequences at a variety of levels, whether with the program or policy itself, as well as political impacts, generating support or a backlash. With the New Deal and the Great Financial Crisis, there were huge political responses which lingered for years afterward. I expect that to be the case after the immediate health crisis passes as well.
The Fed has pushed rates to zero and engaged in unlimited bond buying. What other potential measures could the Fed take that reporters should watch for and how would they affect Main Street?
Skidmore: (The Fed) can lend to banks and, in “unusual and exigent circumstances,” such as now, can lend to other financial firms and non-financial businesses. But, the Fed by law must take the precautions necessary to prevent losses from its lending. (By the way, every penny of the billions of dollars the Fed lent during the 2008-2009 crisis was repaid and taxpayers made a profit.)
As it did during the financial crisis, the Fed is working with the U.S. Treasury, which so far is providing $50 billion in loss protection so that the Fed can lend directly to employers, keep credit flowing to consumers, and protect money market mutual funds. The Fed can leverage that loss protection and lend as much as 10 times the $50 billion.
The recently-passed CARES Act provides another $454 billion to Treasury so that the Fed can expand these programs many times over, if necessary. The Fed already has announced two programs to support large employers. It also has promised a Main Street Business Lending Program but, as of midday April 3, has not yet announced the details.
Hamrick: With all of these huge programs, there are beneficial impacts and there are potentially negative consequences. For example, we can look into who is hurt as the Fed wields its massive balance sheet to buy Treasuries and mortgage-backed securities? There are complicated developments related to short-circuiting of the financial system, not all of which is well understood.
With interest rates going to record low levels again, savers are the forgotten casualties, most of whom live on so-called fixed incomes. Institutional investors, such as those managing pension funds and retirement accounts, can experience problems as well.
Down the road, it is reasonable to expect that a decision will need to be made whether or how to pay the price of the federal spending recently unleashed, piling on further debt and deficits. There will be unknown economic consequences to that as well, including the possibility of higher inflation.
Anything else a journalist should do to tell this story meaningfully and soberly to his or her audience?
Skidmore: One thing journalists did very well during the 2008-2009 financial crisis, and are doing extraordinarily well during the pandemic, is telling the personal stories of people living in it. Former Fed Chair Ben Bernanke likes to quote Alfred Marshall, a late 19th century-early 20th century British economist, who said: “Economics is a study of mankind in the ordinary business of life.”
The best economic and business journalism I am reading now describes ordinary life in extraordinary times. One great example is a Washington Post piece that described the pandemic’s economic impact on a single block of Connecticut Avenue, about a five-minute walk from my house.
Hamrick: It is tough balancing the need for calm against compassion or human connection during a crisis. How much should we allow empathy to generate our response or coverage? That will be up to each individual, effectively acting as their own editor, so to speak, as well as newsroom leaders helping to guide the tone and specifics of coverage overall.
Ultimately, every good story has a personal connection. Think about how to tie work to either individuals or groups of individuals affected, even if it is as broad as an entire community or as narrow as a single person. This is where intuition and empathy should come into play, while still allowing for a high level of journalistic integrity and appropriate balance.
Can you suggest a book or other resource for journalists that might help them understand the current crisis?
Skidmore: My colleagues at the Brookings Institution are working overtime to produce insightful analyses of all aspects of the pandemic, including its economic impact. Their work can be found here.
Hamrick: I would encourage being an aggressive reader, or consumer, of content of all kinds now and into the future including long-form (when possible) as well as shorter-form content across media categories. … In terms of story idea tips, the Reynolds National Center for Business Journalism is one good place to start.
Dave Skidmore is a writing and editing consultant to the Brookings Institutions’ Economic Studies program. He recently retired after more than 20 years in the Federal Reserve Board’s communications office. Before that, he covered economics and banking from the Washington bureau of The Associated Press. He started his journalism career at a local newspaper —The Globe-Times of Bethlehem, Pennsylvania.
Mark Hamrick is Washington Bureau Chief and Senior Economic Analyst for Bankrate.com. He joined Bankrate in January 2013, after leading business news for Associated Press Broadcast for nearly 20 years. He is a past president of the National Press Club and recently completed two terms as president of SABEW, the leading association of business and financial journalists. Mark began his career as a high school student working in commercial radio in his hometown of Coffeyville, Kan.