August 3, 2007

Top Two Biased Reports of the Week – Economy and Business Division

Runner Up

One of the Associated Press’s earliest articles following Friday morning’s release of the government’s Employment Report, which showed July’s unemployment ticking up 0.1% to 4.6% and new jobs increasing by 92,000, had this outrageous paragraph (backup link is here in case the article is revised or removed; bolds are mine):

Construction companies slashed 12,000 jobs in July. Manufacturers shed 2,000 and retailers cut a thousand. Some 28,000 government jobs were eliminated. In contrast, education and health care added 39,000. Leisure and hospitality expanded employment by 22,000. Professional and business services added 26,000 new positions.

Note that AP uses violent terminology to describe relatively modest decreases in employment caused by (apparently evil) private-sector employers, while it applies relatively bland verbs to much larger private-sector increases. Meanwhile, the description of the large reduction in government jobs slips into passive voice, with no perpetrator identified. Zheesh — How obviously biased can you get?

And exactly how does AP know that the government jobs “were eliminated,” anyway? Couldn’t at least some of the government job reductions relate to departing employees whose replacements haven’t been hired yet?

It seems pretty hard to beat the above paragraph for bias, but as you’ll see, the AP was up to the task earlier this week.

The Winner

This is from Thursday’s Tacoma News Tribune, reacting to the Wednesday’s release of the Institute for Supply Management’s Manufacturing Index:

Institute’s monthly survey of plant managers shows economy limping along

While the U.S. manufacturing sector grew for the sixth consecutive month in July, expansion was the slowest since March, a survey said Wednesday, indicating that the economy is plodding along at a tepid pace.

The Institute for Supply Management said its manufacturing index, which reflects the opinions of purchasing managers at factories, plants and utilities, registered 53.8 in July, down from 56.0 in June.

Though not indicated at the link, the Tribune’s report copies the first two paragraphs of this Wednesday report from the Associated Press. But the Tribune is apparently responsible for the headline.

Manufacturing is only 13% 12% of “the economy,” meaning that the “limping” and “tepid” characterizations for the entire economy, especially following last week’s report that the economy grew at an annualized rate of 3.4% in the 2nd quarter, could not (and still cannot) be supported. Also, any index reading above 50 represents expansion, so 53.8 has to be seen as a bit better than a “limp.”

July’s weighted average of the manufacturing and non-manufacturing indices came in at 55.2, which, though lower than most readings during the past year, is still very decent.

I would think that most reasonable people would dispute the AP’s “limping, tepid” characterizations of the economy upon seeing the following graph. It shows the weighted averages of the ISM indices going back to July 1997, when it issued its first Non-Manufacturing report (see the Note below):


Tepid, schmepid.

(Note [revised from earlier, with little impact on the graph presented]: The relative weights given to manufacturing and non-manufacturing are based on annual data available at this Commerce Department page [second link at referenced page]. The weights used for the first seven months of 2007 are the same as 2006. In 1997, manufacturing was 15.4% of the economy; in 2006, it was 12.1%. Rather obviously, non-manufacturing is the rest of the economy. The dividing line between the Clinton and Bush 43 economies is October 2001, the beginning of the first fiscal year over which Bush 43 policies had impact on the federal budget and the economy.)

Cross-posted at


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