The Fed, Still Oracular in the Post-Greenspan Era

The business press's various interpretations of a Bernanke speech

Ben Bernanke gave a speech the other day, saying that… well… he said some thing or another, according to the papers.

The Wall Street Journal’s headline says the Bernank is gloomy:

Fed Sees Recovery Lagging

Bernanke Says Growth Slower Than Expected, Monetary Policy Isn’t ‘Panacea’

The Washington Post says Big Ben is optimistic:

Bernanke: Economy can withstand recent setbacks

Bloomberg News sides with the Journal, but emphasizes that the chairman thinks that the economy needs stimulus:

Bernanke Says Slow Recovery Needs Sustained Record Stimulus

But The New York Times came up with an altogether different take:

Fed Wants Priority Put On Deficit

As does the Financial Times:

Bernanke signals no new round of easing

My head’s spinning.

Let’s take these one by one.

The Journal plays Bernanke’s stance on the economy well, noting that he’s downbeat but not exactly suicidal:

Federal Reserve Chairman Ben Bernanke offered a relatively glum view of the U.S. economy, acknowledging that it is growing more slowly than the Fed had expected, but predicted improvement later this year.

But the WSJ misses by reporting that “inflation up,” and that that ties Bernanke’s hands, and that there’s not much risk of deflation anymore. It’s worth noting that while the overall consumer price index is up 3.1 percent from a year ago, core inflation (which excludes volatile food and gas prices) is up just 1.3 percent. That’s up from where it was last fall, but it’s still low. The Journal should have written something like “inflation is up somewhat, but still low.”

The NYT messes up by emphasizing that Bernanke pushed deficit reduction but waiting until the last sentence of the story to note that he said it would be bad to cut spending in the near term. The Post also decided to drop that in its kicker.

But that’s better than the Journal’s story, which doesn’t even bother to report that news. Nor does the FT’s. Bloomberg handles it best, quoting the relevant Bernanke passage in the middle of its piece and writing this:

Bernanke and Dudley both said lawmakers should rein in budget deficits to ensure long-term growth without cutting back so quickly as to choke off the recovery.

But Bloomberg’s headline gets it wrong on what Bernanke said, implying that he wants to continue the quantitative easing monetary stimulus. He doesn’t.

Finally, the Post is too sanguine about the Fed’s projection for the economy:

The recent slowdown in the U.S. economy is being driven by temporary factors, and growth is likely to accelerate later in the year, Federal Reserve Chairman Ben S. Bernanke said Tuesday.

This isn’t wrong, but it leads readers to believe Bernanke is more bullish on the economy’s near-term prospects than he is.

When Alan Greenspan was Fed chairman, the press used to talk about his oracular pronouncements. While Bernanke is less apt to talk that mumbo jumbo, this coverage shows that the press can still interpret the same news differently.

And of course, that’s not limited to Bernanke talks.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,