Economic news through the magnifying glass: How the media cover economic boom and bust

One of the normative functions of economic news is surveillance, making monitorial citizens aware of significant economic developments. In this light, it is important to look at the way economic news covers periods of recession and economic boom. Previous studies have focused on how the media cover monthly developments of the economy rather than how coverage varies over the course of the economic cycle. Based on parallels between self-reinforcing news waves or media hypes, on the one hand, and coverage of recession and economic boom, on the other, we argue that the media amplify periods of prolonged economic growth or contraction by making the economy more visible and reporting with an overly positive or negative tone. A time-series analysis of the relation between economic developments and the automatically coded tone and visibility of economic news in Danish newspapers (1996–2012) shows that the media functioned as a magnifying glass. During recession, the economy became more negative and visible than economic developments would predict. During economic boom, economic news became more positive, but not more visible. The media adjusted the tone downwards before the economy entered recession. These results are assessed in light of the surveillance function.