Economic News Embargoes Should Apply to All
Several federal government agencies publish important weekly and monthly reports on economic growth, employment, retail sales, specific industry sectors, and (lest we forget) Uncle Sam's awful and getting worse fiscal situation. This information moves markets and often immediately affects the political climate in Washington and elsewhere.
The agencies involved typically place embargoes on these reports. All along, and I must confess quite naively, I thought that having an "embargo" meant that absolutely no one outside of the agency preparing the report was allowed to see the related information until its official release. I have since learned otherwise.
I experienced a jarring incident showing just how seriously the government takes its embargoes on the non-privileged about a dozen years ago. While catching up on email during lunch, I innocently sent a message to the Bureau of Labor Statistics asking why a report embargoed until 8:30 a.m. had an email time stamp about 55 minutes earlier. In short order, I received a phone call from someone working in security at the Department of Labor (DOL). It turned out that there was no embargo violation; as I recall, the time stamp problem had to do with my email program's non-recognition of the beginning of Daylight Saving Time the previous weekend. The point is that Uncle Sam clearly and quite justifiably doesn't want anyone in a position to take advantage of key market-moving and politically sensitive information to see it before anyone else.
So perhaps I was among the few who were surprised to learn last month, as a result of an April 10 policy change at DOL, that many legacy news organizations have had the privilege of accessing otherwise embargoed information ahead of time for decades longer than they've needed it -- or deserved it.
Before the Internet and fax machines, these pre-embargo "lock-ups" made sense. Market participants needed to have an idea of what was in reports they couldn't see for themselves. Typing up or otherwise relaying coherent dispatches for wide dissemination in time for the opening bell, which rang at 10 a.m. at the New York Stock Exchange until 1985, was no easy task. Giving the press a 30-60 minute head start to deal with releases which mostly go live at 8:30 a.m. or later was a practical, necessary and reasonable accommodation.
Additionally, the business press at the time, unlike most of its media counterparts, tended to play its reporting relatively straight, concentrating on just the facts (imagine that). As I explained in a column written over a decade ago (minor edits have been made to the original), that started to change in the late 1970s. Until then:
... [W]e could count on their business reporters (who I will call the “Bizzies”) to accurately report what was really going on in the economy, even if the news wasn’t good or didn’t fit the liberal template.
That changed with the election of Ronald Reagan.
... A critical part of the Reaganites’ pre-inauguration tax-cut campaign was an emphatic belief that the economy was in deep trouble, and that it was getting worse. They were even whispering that we might be on the verge of the "C-word” (Crisis) to describe economic conditions.
... [T]he Newsies, with the help of some outgoing Carter Administration officials. ... ridiculed the verge-of-crisis talk and called it irresponsible, even as the prime rate rose to 21.5%! Some Newsies even complained that such talk in and of itself could cause the economy to get worse (sounds familiar, doesn’t it?).
The Newsies, who had never really concerned themselves with what the Bizzies were saying and doing, expected backup from them on this important political issue. But to the Newsies’ horror, the Bizzies by and large agreed with the Reagan team! While the economy-saving Reagan tax cuts eventually passed for a number of reasons, the lack of sustained opposition from the business press was certainly a factor working in its favor.
The Newsies’ response to having been “betrayed” by their own Bizzies was to assign liberal reporters and columnists to the business beat. ... [B]usiness journalism went downhill during rest of the 1980s because of the politicization that occurred. Newsies became politically-driven Bizzies. Bizzies who didn’t go along went elsewhere.
The changes were profound. By the summer of 1985, The Washington Post, with a straight face and the backing of their Bizzies, told us that the economy was in the middle of a “slump.”
Following 1983 and 1984, when the nation's gross domestic product grew by 4.5% and 7.2%, respectively, growth in 1985 was 4.1%. We could use a "slump" like that right about now.
The decline of business journalism has almost never stopped. Now it's to the point where most of the press, in the interest of propping up Dear Leader, spent this year's entire first quarter regaling us about our supposedly strengthening economic recovery. Horse manure; we have just learned that 2012 growth is expected to come in at perhaps half of that seen in 1985.
Pre-embargo establishment press access should have ended years ago.
It's no longer necessary. Market participants and the non-elites now have immediate access to information upon its release, and usually have plenty of time to process its essence before the 9:30 a.m. opening bell. (If I were in charge, I'd move the embargo times for a few of the key reports back by 30 minutes to allow for more complete digestion.)
Far more important, the Associated Press (aka the Administration's Press), the other wire services, the major newspapers, and the rest of the select outfits which currently have pre-embargo access shouldn't have it. They should have to compete for news consumers' attention and eyeballs on the same terms as everyone else in New and Old Media. If they're really as great as they say they are in analyzing and interpreting information, they shouldn't need the head start. But they're not, and the less deluded among them know it. All too often they are exclusively narrative framers.
After using their pre-embargo windows to get an (often incomplete) grasp of the reports involved, their next enterprise almost inevitably seems to be to figure out how they'll spin it. To name just two recent AP examples seen during the course of separate individual business days, a declining March consumer confidence report devolved from "falls" to "rosy," and bad news about April housing starts was flushed down the memory hole while good news about building permits got the full-trumpet treatment.
I contend that this kind of "reporting" would have a tough time surviving if it operated from the same starting line as everyone else. One or both of two things would then happen:
- New Media business and economic commentators would soon become the dominant go-to places for people who want accurate and objective information accompanied by insightful analysis.
- In response, the establishment press would start putting genuinely knowledgeable Bizzies on the business beat, or risk irrelevance.
It's long past time we find out.