Does media coverage of economic conditions have a substantial impact on public views of the economy? Maybe if the New York Times started saying the economy was great, consumer confidence would rise and the increased confidence would in fact create better conditions. Daniel Hopkins deems it unlikely:
Follow the blue line: Americans’ concern about the economy reliably grows during recessions and declines during expansions. But the key finding is in the relationship between the various trends. The tone of coverage in the Washington Post and the New York Times does not appear to systematically lead Americans’ economic perceptions, a point that formal statistical tests reinforce. If anything, the relationship is the reverse, with Americans’ economic attitudes shifting before we see similar shifts in print. These are only two newspapers, to be sure, but they are two prominent national newspapers. And they are commonly perceived (or derided) as influential. When viewed over the long-term, Americans appear to be responding to actual economic conditions—and not to the tone of these national newspapers.
It would be very useful to see more research in this area. Things like consumer confidence and expectations of inflation or NGDP growth play important roles in a lot of economic accounts of what’s going on, but I don’t think we know very much about where expectations or confidence comes from. It’s pretty unsatisfactory to just wave in the direction of “animal spirits” or “rational expectations” when there’s probably a real answer. Does network TV news matter in a different way from elite newspapers? Does business news matter?