What impact has the media had on the economy?

The other day as I stood in a long line at Costco to buy my two small items (they really need an express lane there), I was struck by how many people were there despite the current state of the U.S. economy. On a previous trip to Costco just a few days earlier my wife and I were surprised to see how many people were walking out with huge, flat-screen TVs. All of this, plus some discussions I’ve had recently, led me to ponder on what kind of impact the media has had on our economic difficulties of late.

Phrases like “economic turmoil,” “cash burn” and “downturn” seem to make their way into nearly every media story I read, watch or listen to. How many times have you seen a picture of a stock broker with his palm against his forehead and a look of dismay on his face? I’ve now become an international finance expert because I can tell you everyday how well or bad the Asian markets performed overnight. Yet, despite the economic crisis, I still find myself waiting in a long line at Costco.

I’m not naive enough to believe that all is wonderful with our economy, but part of me has to believe that the media has contributed to some of the panic and despair some people have experienced in these hard times. Things are tough for sure, but I have to wonder how much the negative media coverage of the economy has had upon Americans’ psyche. Does this contribute to the panicked sell-offs on Wall Street? If I made my financial decisions based solely on media reports, I’d be hiding my money in my mattress (which I don’t do, so don’t come looking).

Perhaps in the media’s haste to get readers, viewers or listeners, they make their financial reporting as sensational as possible. What if they tempered their coverage of the bad news by reporting on some bright spots in the economy (aside from the booming profits of the oil companies)? I have to believe that this would contribute to increased consumer confidence.

Perhaps I’m way off in my thinking on this one, but if not, what relevance does this hold for us as public relations practitioners? I’ve often questioned how much impact media relations has on our efforts to build relationships with our publics, but I’m beginning to think that broad and repeated coverage of our organizations is influential; for good or for bad.

I’m interested, however, in your thoughts. Has the media contributed to panic and uncertainty in the economy? How much impact does media coverage really have on our publics?

UPDATE: Corey Mull of TMG Strategies just alerted me to a similar post he wrote for their blog a few months ago. It echoes much of what I wrote here, with some additional insight.