4 Feb 2024

Does bad economic news trump good news?

From Mediawatch, 9:12 am on 4 February 2024

Stories about surging inflation, successive food price rises and more Kiwis in arrears topped bulletins and filled front pages last year. But recent news about slowing inflation, cheaper food and rising business confidence hasn't had the same impact. How come?

TVNZ's 1 News reports the recent figures showing another drop in the rate of inflation - now under 5 percent.

TVNZ's 1 News reports the recent figures showing another drop in the rate of inflation - now under 5 percent. Photo: screenshot / TVNZ 1 News

“All eyes and ears - of analysts and economists anyway  - are on the speech to be given by the chief economist of the Reserve Bank Paul Conway,” RNZ’s business editor Gyles Beckford said last Tuesday, wrapping up his early business update on Morning Report.

It was more than just analysts and economists eagerly awaiting Conway’s address that morning. Some media outlets livestreamed it online too, issuing news alerts beforehand.  

The media don’t usually pump up an economist on a webinar. Why now? 

“People are waiting to hear if there's any signal of a change of mood from the unexpectedly hawkish tone of the RBNZ in November. That might point to an earlier-than-expected start for cutting (interest) rates,” Beckford explained. 

But when he returned for the later update after 8.30, Morning Report co-host Corin Dann pointed out there are months between decisions on the official cash rate - and nothing would happen in a hurry. 

“There are three months between meetings of the Reserve Bank. That is really quite impractical to say the least. In fact, it's downright stupid,” Beckford replied. 

However, even the hint of a non-imminent change clearly excited news editors. 

Last year, data revealing stubbornly high inflation and rising food prices seemed to be topping the bulletins whenever it came out - often with bleak headlines about the "cost of living crisis". 

Every month, reports from New Zealand's largest credit database Centrix tallying debts and mortgages in arrears prompted alarming stories about a possible surge in mortgagee sales. 

The National Party - then in opposition - even warned “a mortgage bomb” could blow up the economy if interest rates remained high.

Supermarkets kicked off a blame-game with stats showing their suppliers were fuelling rising prices - rather than their own profits. That bitter row was widely reported.

It was worrying stuff. But what happens when the data is better?  

Similar stories when supermarkets’ supplier cost growth hit the lowest point for 18 months in December were harder to find.  

“It’s official. Inflation is deflating,” Lisa Owen told RNZ’s Checkpoint listeners the day the latest quarterly data showing inflation below 5 per cent for the first time in ages. 

"“The cost of living is easing, with figures out today showing the lowest annual inflation rise in two years,” Simon Dallow told TVNZ’s 1 News viewers soon after, following up with graphics showing the CPI rose just 0.5 percent the three months to December.

“The pieces are falling into place for a much-improved economy in 2024 - just not quite yet. Hang in there - it is always darkest just before the dawn,” the Herald said on Friday. 

But still, this ‘easing’ isn’t making the same impact in the news as the worsening inflation and prices did last year. 

Within the last month, surveys finding business confidence rising and food price inflation falling for the fourth consecutive month made few headlines. 

But the bad news still does. 

Last Thursday, TVNZ’s 1 News told viewers “New Zealanders are getting behind on payments”. 

“More than 400,000 people fell behind on credit payments and the number of mortgage accounts past due exceeded 20,000,” it reported. 

This was also based in the latest monthly report from credit agency Centrix, showing 4000 more Kiwis in arrears than a month earlier. 

But last year more people were in arrears - and in 1 News’ own report this week Centrix explained the season was the reason for the latest modest monthly uptick. 

“People tend to spend money and incur credit prior to Christmas. And it then comes back to bite them early in the new year,” he explained.  

Last year, there was of course an election in which the cost of living was a huge political football that got a good old kicking in the media. 

One business and finance journalist told Mediawatch political correspondents and sometimes even political editors were turning up at press conferences about economic data back then - but less so now. 

But does that explain why more recent good economic news doesn’t seem to make as many headlines as the bad stuff does?

“You must not be reading The Herald enough,” NZME multimedia business journalist Madison Reidy told Mediawatch, pointing out that last week’s inflation rate news was covered in Herald previews, analysis, news stories, online commentary and a podcast.  

“We are definitely still treating inflation as one of the issues our economy is battling with this year,” said Reddy, also the host of twice-weekly Market with Madison vodcast for nzherald.co.nz. 

“Just because a headline doesn't have inflation or food prices or ‘cost of living crisis’ doesn't mean that it's not part of our wider coverage. But maybe people are getting tired of the word ‘inflation’.  I think even we're getting a little bit sick of it. So you may just see it less.”

Also fresh inflation figures reflect things that have been filtering through in the previous weeks and months - essentially a statistical confirmation of things citizens have already lived through. 

“In the US they get inflation data monthly; we only get ours quarterly. By the time it comes out, it's ... not always relevant to how the economy is actually going. 

“But it's also the only data we have and this is why the likes of Paul Conway and Adrian Orr get so much media attention for things they say. Often the data is so far behind that we need a more up-to-date take to give us a read on what they're going to do,” she said. 

“I do wonder if New Zealanders will talk about inflation cooling off as much as they did on its way up,” ASB senior economist Kim Mundy said in a newsletter last week. 

“Even as dinner table chat inevitably returns to house prices, you can be assured economists will be watching the drop just as closely,” she added. 

Do news editors respond more to what they think people worry about - like they did at the peak of the “cost of living crisis” last year? 

“We were in the middle of an election cycle then, with the cost of living at its core. And elections always create ‘news hype’ cycles.

“We can only report on what the politicians are saying to us, and then back it up with the economic data. So very similar to the state of the economy: we don't get to pick it - we just have to report on what it is.”

In general, is bad or worrying economic news more engaging for media than news of incremental improvements, such as the recent figures on business confidence, the CPI and inflation?

“Whether it's business, economic, or political or otherwise, news coverage is determined by the relevance to an audience. Inflation affects everyone ... whether you like it or not, and it also makes it difficult for businesses to survive. 

“Inflation getting worse is certainly a bigger - but I wouldn't say ‘better’ - story in a news sense. But when something's easing, it isn't necessarily a better or more positive news story.

“In the case of inflation, that 4.7 percent rate that we had last week, that is still inflation and prices going up.

“When inflation gets down to that target range for the RBNZ, we might come out with a celebratory title saying we've ‘won the war on inflation’. I wouldn't be surprised if we did that.”