While America Slept
With the presidential election in high gear, domestic issues are likely to dominate political debates for the next year. But the real threats to American well-being and to President Obama’s reelection hopes may come from abroad.
“The U.S. is currently doing better than a few months back,” observed Kenneth Courtis, founding partner of New York-based Themes Investment. “But the U.S. is very vulnerable to a deeper contraction in Europe or a shock, such as real difficulties in China or higher energy prices.”
Recent studies show that the American people, abetted by the news media, aren’t paying attention. They may eventually rue their domestic preoccupation as the problems of the rest of the world intrude more and more on America’s future.
The biggest threat facing the U.S. economy emanates from Europe. Eric Chaney, the chief economist for AXA Group, the giant French insurer, believes there is a 25 percent chance the eurozone will break up. In his “eurogeddon” scenario, Italy eventually abandons the euro, Spain and France soon follow, and Germany returns to the deutsche mark.
The result, concludes Chaney: “The EU banking system partially melts down. A deep recession follows, with an 8 percent contraction in EU [gross domestic product], leading to 5 percent shrinkage of the U.S. GDP. This turns into a global depression.”
This is not a prospect that can be very reassuring to either a president seeking reelection or a Republican challenger contemplating a first term in office.
A confrontation with Iran over its nuclear program could be equally catastrophic. Analysts say the price of oil could easily rise to $150 a barrel if the flow from the Persian Gulf region is impeded, imperiling hopes of a sustained U.S. economic recovery.
China is a less imminent threat, but not to be overlooked. “Approximately 80 percent of global growth in 2012 will be coming from emerging markets,” noted Courtis. “About half of that will be from China, and another quarter will be directly China-related. So any difficulties in China next year will have a broad international impact.”
The Chinese economy is already slowing; there is a real-estate bubble and civil unrest is growing. Beijing has managed such problems before. But this time, the stakes for the U.S. are greater.
As these international challenges loom, a mid-January Pew Research Center survey of the American public’s top policy priorities in 2012 found that “concerns rest more with domestic policy than at any point in the past 15 years.”
With the unemployment rate at 8.5 percent, voters’ domestic preoccupation is hardly surprising. But the media are doing little to give them a broader view of the threats they face.
Coverage of the euro crisis is typical of this failing. In the fourth quarter of 2011, U.S. newspapers, television, radio, and the Internet devoted 5.4 percent of their coverage to the European economy, according to regular content analysis done by the Pew Project on Excellence in Journalism.
By the second week of January 2012, overall coverage of the euro crisis had fallen to just 2 percent—the same news attention devoted to the National Football League playoffs.
Coverage of other threats fared no better. Iran accounted for only 5 percent of the news hole the second week of January, and China didn’t register as a top-10 story. And neither Iran nor China showed up as one of the top five stories Americans were following.
This failure to pay attention to external threats is, in part, due to an all-consuming media focus on the presidential campaign. In early January, election coverage ate up nearly half the news hole, up from only one-fifth as recently as November 2011. This electoral preoccupation is only likely to worsen.
But the media are not solely to blame. Only 12 percent of Americans told the Pew Research Center in early January that they were following the euro debt crisis very closely. By mid-January, they had largely stopped paying attention at all.
Americans’ disinterest in external challenges to the U.S. economic recovery reflects a chicken-and-egg problem. Is the absence of news coverage because of lagging public interest? Or is the lack of interest a product of inadequate coverage? The two feed off each other. But the result is the same: a potential blindsiding of the public by a euro crisis, a spike in oil prices, or an implosion in China.
Foreign news will never compete with domestic sex scandals. But it is incumbent upon the news media to cover international events that threaten to impact the lives of their readers and viewers; it is incumbent upon citizens to pay more attention;, and it’s incumbent upon their elected representatives to speak out more on these issues, to underscore their importance for both the media and voters.
Bruce Stokes is a senior transatlantic fellow at the German Marshall Fund in Washington, DC.
Image by the Smithsonian Museum of Natural History.