Financial Media Seized by Schizophrenia in Uncertain Times

(MoneyWatch)  In times like these when it's unclear what to make of the economic recovery, the media turns into a raving schizoid with its financial coverage. As a news consumer, don't get too worried -- or relieved -- about the back-and-forth mix of ominous and elated headlines you're seeing.

The schizophrenia is most pronounced with monthly and even weekly economic reports. In the process of infusing significance into a statistic to grab the audience's attention, reporters and editors often create either a graver or cheerier characterization than the underlying numbers suggest. Worse yet, different media outlets will read the statistics in completely different ways.

For instance, a Reuters headline today read: "Jobless claims at lowest level since January." You'd think that's cause for celebration, but claims only fell 12,000 from the week before -- an average of 240 per state -- and remain above a historically high half-million mark. The Associated Press headline, by comparison, simply read: "U.S. Jobless Claims Decline," which of course isn't going to seize anyone's attention.

Conversely, a Bloomberg headline today read "US Foreclosure Filings Surpass 300,000 for 8th Straight Month," which is true, but they've also fallen for three straight months. A CNBC headline was more positive yet still tempered with caution: "Foreclosures Fall Again But Improvement Likely Fleeting."

As an investor, don't trade on any of this news no matter how dramatic it seems. Sure, economic reports serve as vital signs, but when an economy isn't trending clearly upward or downward, they are going to be all over the map.

While you can take any one with more than just a grain of salt, better to view them in aggregate, which is what the Index of Leading Economic Indicators does. And for what it's worth, that index has risen 5.7% in the last six months, its fastest increase since 1983 -- when the U.S. was emerging from the previous worst recession since the Great Depression.