More recession talk from the mainstream media

Americans are a bit pessimistic on the near-term outlook for the U.S. economy if the data from this CNN/Money story is anywhere close to being accurate.
The report details how more than three-quarters of those polled believe that a recession is either near or already here and how many respondents indicated they are cutting back on their spending.

That can't be good.

As you'll recall, spending is not only the life-blood of the American economy, but it is the very foundation of life as we know it in these United States.

Unfortunately, a rapidly growing amount of spending has been financed by skyrocketing debt in recent years and debt service is becoming increasingly difficult for many. The fact that home values, the collateral for much of that spending money, are now plunging, well, that doesn't help either.

You kind of knew things would probably turn out this way.

"Those are pretty striking results, a pretty stark assessment," said Dean Baker, who is the co-director of the Center for Economic and Policy Research, and one of the economists who believes that the nation may have slipped into a recession in December. He said that if Americans are this worried about the economy, it could cause an even sharper downturn than many economists expect.

"[Consumer] consumption has been what's holding up the economy," Baker said. "I've been surprised by how well it has held up as the housing market plummeted. But it looks like we're coming to the end of that."

Even some economists who don't think economic fundamentals justify the current talk of a recession worry that a change in consumer sentiment by itself could increase the risk of recession.

"If consumers who were only worried [about a recession] actually pull back on their spending reigns, then it becomes a self-fulfilling prophesy," said Rich Yamarone, director of economic research at Argus Research.

Yes, it's called momentum.

And right now "Big Mo" is on the side of a real doozy of a downturn for the economy.

How many times have you heard the phrase "We may not be in a recession, but it sure feels like one" in recent weeks?

How many times has the dour outlook for the economy been the lead story on the evening news so far in 2008?

A lot.

An increasing amount of recession talk from the mainstream media is sure to make things worse than they would otherwise be and you'll probably start hearing complaints like, "The mainstream media is making things worse by talking incessantly about a recession".

All they are really doing is reporting the news - that's their job.

You heard very few complaints about the media when they talked incessantly about how we were all getting rich during the housing boom.