12.2 Business and Economic Journalism
5 min read•july 30, 2024
dives into the world of money and markets. From corporate drama to economic trends, it's all about following the cash and understanding what makes businesses tick.
Reporters in this field need to know their stuff. They decode financial jargon, crunch numbers, and explain complex ideas in simple terms. It's a balancing act of accuracy, ethics, and making sense of the business world for everyday readers.
Business and Economic Terminology
Fundamentals of Business Journalism
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- Business journalism reports on commerce aspects encompassing corporate affairs, , and economic trends
- Key economic indicators measure economic conditions
- ()
- Inflation rates
- ()
- Financial markets terminology includes , , , , and
- fundamentals involve understanding financial statements
- Balance sheets show assets, liabilities, and equity at a specific point in time
- Income statements display revenues, expenses, and profits over a period
- Cash flow statements track cash movements in and out of a company
- Significant business events require specific reporting approaches
- combine or transfer ownership of companies
- () transition private companies to public trading
- resolve debts when a company cannot meet obligations
Macroeconomic Concepts and Industry-Specific Knowledge
- Macroeconomic concepts contextualize business news
- uses government spending and taxation to influence the economy
- employs interest rates and money supply to affect economic conditions
- involves the exchange of goods and services across borders
- consist of expansion, peak, contraction, and trough phases
- Industry-specific jargon varies across sectors
- Technology (cloud computing, artificial intelligence, cybersecurity)
- Healthcare (electronic health records, drug trials, medical devices)
- Energy (renewable sources, fracking, grid infrastructure)
- Finance (derivatives, hedge funds, blockchain)
- Regulatory frameworks differ by industry
- Securities and Exchange Commission (SEC) oversees financial markets
- Food and Drug Administration (FDA) regulates pharmaceuticals and food safety
- Environmental Protection Agency (EPA) enforces environmental protection standards
Financial Statement Analysis
Components of Financial Statements
- displays a company's financial position at a specific point in time
- Assets represent resources owned by the company (cash, inventory, equipment)
- Liabilities show debts and obligations (loans, accounts payable)
- Shareholders' equity reflects owners' stake (retained earnings, paid-in capital)
- reports financial performance over a period
- Revenue represents money earned from business activities
- Expenses show costs incurred to generate revenue
- Net income calculates the difference between revenue and expenses
- tracks cash movements
- Operating activities show cash from core business operations
- Investing activities display cash used for long-term investments
- Financing activities reflect cash from debt or equity transactions
Financial Ratios and Market Analysis
- Key financial ratios analyze company performance
- Price-to-Earnings (P/E) ratio:
- :
- ():
- Market trends analysis uses technical indicators
- Moving averages smooth out price data to identify trends
- () measures momentum on a scale of 0 to 100
- Trading volume indicates the number of shares traded in a given period
- Economic indicators provide different perspectives
- predict future activity (stock market performance, building permits)
- reflect current conditions (personal income, industrial production)
- confirm long-term trends (unemployment rates, Consumer Price Index)
- Central bank reports offer insights on monetary policy and economic outlooks
- 's Beige Book summarizes current economic conditions
- 's Economic Bulletin provides economic and monetary analysis
- evaluate industry performance
- Retail: compare revenue from existing stores over time
- Technology: () measures monetization efficiency
Reliable Sources for Business News
Primary Sources and Financial News Agencies
- provide first-hand information
- Company filings with regulatory bodies (SEC's EDGAR database)
- Official government statistics (Bureau of Labor Statistics, Census Bureau)
- Central bank reports (Federal Reserve, European Central Bank)
- Reputable offer real-time data and breaking news
- provides financial software tools and media content
- delivers news and financial market data globally
- offers business and financial news services
Industry Publications and Academic Resources
- Industry-specific trade publications cover niche sectors
- Healthcare: Modern Healthcare, Becker's Hospital Review
- Technology: TechCrunch, Wired
- Finance: The Wall Street Journal, Financial Times
- Academic journals publish peer-reviewed economic studies
- Research institutions produce economic analyses
- (NBER)
- Financial analysts' reports provide insights and forecasts
Ethical Considerations in Business Journalism
Objectivity and Conflict of Interest
- Maintain objectivity by avoiding personal financial interests in reported companies or sectors
- Disclose potential conflicts of interest to editors and readers
- Personal investments related to coverage areas
- Relationships with sources or companies being reported on
- Balance public's right to know with potential market impact of sensitive information
- Consider timing of releasing market-moving news
- Evaluate potential consequences of reporting on ongoing negotiations or deals
Source Protection and Legal Implications
- Protect confidentiality of sources, especially in cases of
- Whistleblowing on corporate misconduct
- Reporting on internal company matters
- Understand legal implications of reporting on insider information
- Avoid allegations of market manipulation
- Comply with
- Recognize the power of business journalism to influence markets
- Report accurately without sensationalism
- Provide context and balanced perspectives on market-moving news
Sponsored Content and Editorial Integrity
- Address ethical challenges in sponsored content and native advertising
- Clearly label sponsored articles and advertisements
- Maintain separation between editorial and sponsored content
- Uphold editorial integrity in face of commercial pressures
- Resist influence from advertisers on reporting
- Maintain independence in coverage of major business partners
- Ensure transparency in data sources and methodologies
- Disclose limitations of financial models or projections
- Provide access to raw data when possible for verification
Key Terms to Review (58)
American Economic Review: The American Economic Review is a prestigious peer-reviewed academic journal published by the American Economic Association, focusing on a wide range of economic issues and research. It serves as a platform for significant advancements in economic theory and empirical studies, making it essential for understanding economic dynamics and policies in business and economic journalism.
ARPU: ARPU, or Average Revenue Per User, is a metric used primarily by subscription-based businesses to measure the revenue generated per user or unit. This key performance indicator helps businesses assess their revenue generation capabilities and customer profitability by providing insight into how much each customer contributes on average over a specific period. Understanding ARPU is crucial for companies to evaluate pricing strategies and inform financial forecasting.
Average revenue per user: Average revenue per user (ARPU) is a financial metric that calculates the revenue generated per user or subscriber over a specific period of time. This metric is crucial for businesses, particularly in sectors like telecommunications and digital services, as it helps assess the effectiveness of pricing strategies and overall business performance. Understanding ARPU allows companies to evaluate customer profitability and inform decisions related to marketing, service offerings, and expansion.
Balance sheet: A balance sheet is a financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time. It provides a snapshot of what a business owns and owes, offering insights into its financial health. This document is essential for business and economic journalism as it helps assess a company's performance and stability, guiding investors and stakeholders in their decision-making processes.
Bankruptcy proceedings: Bankruptcy proceedings are legal processes that allow individuals or businesses that are unable to repay their debts to seek relief from some or all of their financial obligations. These proceedings can involve liquidation of assets or restructuring of debt, depending on the type of bankruptcy filed. They play a critical role in business and economic journalism as they reflect the financial health of companies and impact markets, creditors, and employees.
Bloomberg: Bloomberg is a global financial services, software, and media company that provides data, analytics, and insights to financial professionals and institutions. It is well-known for its Bloomberg Terminal, a powerful tool used by traders and analysts to access real-time financial market data, news, and trading capabilities, making it a cornerstone in business and economic journalism.
Bonds: Bonds are debt securities issued by corporations, governments, or other entities to raise capital, where the issuer borrows funds from the bondholder in exchange for periodic interest payments and the return of the bond's face value at maturity. This financial instrument plays a vital role in business and economic journalism, as it reflects an entity's creditworthiness and impacts overall economic conditions.
Brookings Institution: The Brookings Institution is a nonprofit public policy organization based in Washington, D.C., known for conducting in-depth research and analysis on a wide range of issues, including economic policy, governance, and international relations. It aims to provide independent and innovative ideas that influence policy decisions at various levels of government.
Business journalism: Business journalism is a specialized field of reporting that focuses on the financial and economic aspects of businesses, industries, and markets. It aims to inform the public about economic trends, corporate practices, and market dynamics, while also holding businesses accountable through investigative reporting. This type of journalism is crucial for understanding the economic landscape and its impact on society, influencing decisions made by consumers, investors, and policymakers.
Cash flow statement: A cash flow statement is a financial report that provides a detailed analysis of all cash inflows and outflows within a business over a specific period. It highlights how well a company generates cash to pay its debts, fund its operating expenses, and invest in growth. Understanding cash flow statements is crucial for assessing a company's financial health and liquidity, as it reflects operational efficiency and the ability to manage financial obligations.
Coincident indicators: Coincident indicators are economic measurements that move in line with the overall economy, reflecting the current state of economic activity. They help analysts and journalists understand the present economic conditions, making them essential for reporting on business and economic trends. These indicators can include metrics like employment rates, industrial production, and retail sales, providing a real-time snapshot of how the economy is performing.
Commodities: Commodities are basic goods used in commerce that are interchangeable with other goods of the same type. They play a crucial role in the economy as they serve as the building blocks for economic activity, impacting supply chains, pricing, and trade dynamics globally. Commodities can be categorized into two types: hard commodities, which are natural resources like gold and oil, and soft commodities, which include agricultural products like wheat and coffee.
Consumer Price Index: The Consumer Price Index (CPI) is an economic measure that examines the average change over time in the prices paid by consumers for a basket of goods and services. It serves as a critical indicator of inflation, helping economists and policymakers assess the cost of living and economic stability. The CPI tracks price fluctuations across various categories, including food, housing, transportation, and healthcare, providing insights into consumer behavior and purchasing power.
Corporate finance: Corporate finance refers to the area of finance that deals with funding sources, capital structuring, and investment decisions within a corporation. This discipline is crucial as it focuses on maximizing shareholder value through long-term and short-term financial planning and the implementation of various financial strategies. Corporate finance plays a key role in helping businesses determine the best ways to raise capital, manage financial risks, and allocate resources efficiently.
CPI: The Consumer Price Index (CPI) is a measure that examines the average change over time in the prices paid by consumers for a basket of goods and services. It's an important economic indicator that reflects inflation and purchasing power, impacting various sectors such as business and economic journalism as it provides critical data on consumer behavior and cost of living adjustments.
Debt-to-equity ratio: The debt-to-equity ratio is a financial metric used to evaluate a company's financial leverage by comparing its total liabilities to its shareholders' equity. A higher ratio indicates that a company is more reliant on borrowed funds to finance its operations, which can imply greater risk, while a lower ratio suggests a more conservative approach with less reliance on debt.
Derivatives: Derivatives are financial contracts whose value is derived from the performance of an underlying asset, index, or rate. They are commonly used for hedging risk, speculation, and enhancing investment returns. This financial instrument can take various forms, such as options and futures, allowing investors to manage exposure to price fluctuations in various markets.
Dow Jones: The Dow Jones is a stock market index that represents 30 large, publicly-owned companies in the United States. It serves as a key indicator of the overall health of the stock market and the economy, reflecting changes in stock prices and providing insights into economic trends. The index is one of the oldest and most widely recognized benchmarks for tracking the performance of blue-chip stocks, often influencing investor sentiment and economic reporting.
Economic cycles: Economic cycles refer to the fluctuations in economic activity over time, characterized by periods of expansion and contraction. These cycles impact key indicators such as GDP, employment rates, and consumer spending, influencing how businesses operate and how consumers make financial decisions. Understanding economic cycles is essential for analyzing market trends and predicting future economic conditions.
European Central Bank: The European Central Bank (ECB) is the central bank for the euro and administers monetary policy within the Eurozone. It plays a critical role in managing inflation, regulating interest rates, and ensuring financial stability across its member states. The ECB’s decisions significantly impact economic conditions and currency stability in Europe and beyond.
Federal Reserve: The Federal Reserve, often referred to as the Fed, is the central banking system of the United States, established in 1913 to provide the country with a safe, flexible, and stable monetary and financial system. It plays a critical role in managing the nation's monetary policy, regulating banks, maintaining financial stability, and providing financial services to the government and financial institutions. The Fed's actions significantly influence economic growth, inflation, and employment levels across the country.
Financial markets: Financial markets are platforms or systems that facilitate the buying, selling, and trading of financial instruments like stocks, bonds, currencies, and derivatives. These markets play a crucial role in the economy by enabling companies to raise capital, allowing investors to trade assets, and influencing interest rates and economic growth.
Financial news agencies: Financial news agencies are organizations that specialize in the collection, dissemination, and analysis of financial and economic information. They provide real-time data, news reports, and analysis on various financial markets, helping investors, analysts, and businesses make informed decisions. Their role is crucial in business and economic journalism as they ensure that timely and accurate financial information is accessible to stakeholders.
Financial reporting: Financial reporting is the process of producing statements that disclose an organization's financial status to stakeholders, including investors, creditors, and regulatory agencies. This practice includes the creation of income statements, balance sheets, cash flow statements, and other financial documents that help assess the financial health and performance of a business. It plays a vital role in maintaining transparency and accountability within the corporate world.
Fiscal Policy: Fiscal policy refers to the use of government spending and taxation to influence the economy. It is a vital tool for managing economic performance, as it can stimulate growth during downturns or cool down an overheated economy. This policy directly impacts inflation, employment levels, and overall economic stability.
Foreign exchange rates: Foreign exchange rates are the values at which one currency can be exchanged for another, reflecting the relative value of currencies in the global marketplace. These rates fluctuate based on supply and demand dynamics, economic indicators, geopolitical events, and central bank policies, playing a vital role in international trade and investment.
GDP: Gross Domestic Product (GDP) is the total monetary value of all goods and services produced within a country's borders over a specific time period, typically a year or a quarter. It serves as a comprehensive measure of a nation's overall economic activity and health, reflecting the size and performance of its economy. GDP is often used to compare economic performance between countries and to track economic growth over time.
Goldman Sachs Global Investment Research: Goldman Sachs Global Investment Research is a division of the investment banking giant Goldman Sachs, dedicated to providing in-depth analysis and insights on various financial markets, economies, and industries. This research helps clients make informed investment decisions by delivering data-driven reports, forecasts, and strategic advice that are critical in understanding market trends and economic conditions.
Gross Domestic Product: Gross Domestic Product (GDP) is the total monetary value of all goods and services produced within a country's borders over a specific period, typically measured annually or quarterly. It serves as a broad indicator of a nation's economic activity and health, helping to gauge economic growth and standard of living. A rising GDP often signals a flourishing economy, while a declining GDP can indicate economic trouble.
Harvard Business Review: Harvard Business Review (HBR) is a leading publication that provides insights and analysis on business and management practices. It covers a wide range of topics including strategy, leadership, innovation, and organizational change, making it an essential resource for business professionals and scholars. HBR is known for its rigorous research, practical applications, and thought-provoking articles that encourage critical thinking and informed decision-making.
Income statement: An income statement is a financial report that summarizes a company's revenues, expenses, and profits over a specific period, typically a fiscal quarter or year. This statement helps stakeholders assess the company's financial performance by showing how much money the company made or lost during that time. It plays a vital role in business and economic journalism, as it provides critical insights into a company's operational efficiency and profitability.
Industry publications: Industry publications are specialized media outlets that focus on specific sectors or fields, providing news, analysis, and insights relevant to professionals within those industries. These publications play a crucial role in keeping stakeholders informed about trends, innovations, and regulatory changes that impact their areas of work, making them vital resources for business and economic journalism.
Inflation rate: The inflation rate measures the percentage change in the price level of goods and services in an economy over a specific period, typically annually. This indicator helps assess the purchasing power of money and is crucial for understanding economic stability, as high inflation can erode consumer confidence and savings. A rising inflation rate can signal economic growth but may also lead to increased costs for businesses and consumers.
Initial public offerings: Initial public offerings (IPOs) refer to the process by which a private company offers its shares to the public for the first time, allowing it to raise capital from a broader range of investors. This important financial event transforms a company from being privately held to publicly traded, and it typically involves extensive regulatory compliance and disclosure of financial information to ensure transparency and investor protection.
Insider trading regulations: Insider trading regulations are laws and rules designed to prevent individuals with access to non-public, material information about a company from trading its stocks or securities based on that information. These regulations aim to promote fairness and transparency in the financial markets by ensuring that all investors have equal access to important company information before making investment decisions.
International trade: International trade refers to the exchange of goods and services between countries, enabling nations to access products that may not be available domestically. It plays a crucial role in shaping economies, influencing local markets, and enhancing global economic interdependence. By allowing countries to specialize in the production of certain goods, international trade can lead to increased efficiency and lower prices for consumers worldwide.
IPOs: An IPO, or Initial Public Offering, is the process through which a private company offers its shares to the public for the first time, transforming into a publicly traded company. This crucial step allows companies to raise capital from a broad range of investors and typically involves a detailed registration process with regulatory bodies. Companies usually pursue IPOs to fund expansion, pay debts, or enhance their public profile in the market.
J.P. Morgan Global Research: J.P. Morgan Global Research is a division of J.P. Morgan Chase & Co. that provides comprehensive analysis and insights on global markets, economies, and industries. Their research informs investment strategies and decision-making for clients and stakeholders, playing a significant role in the landscape of business and economic journalism.
Journal of Finance: The Journal of Finance is a leading academic journal that publishes research on various aspects of finance, including financial markets, instruments, and institutions. It serves as a critical platform for disseminating innovative financial theories and empirical research, influencing both scholars and practitioners in the field of finance.
Lagging Indicators: Lagging indicators are statistical measures that reflect the performance of an economy or a business after changes have occurred. They are used to confirm trends in economic activity, such as employment rates or GDP growth, and typically follow events, providing insights into how the economy has performed rather than predicting future movements. Understanding lagging indicators is essential for analyzing the health of a business or the economy over time.
Leading Indicators: Leading indicators are economic factors that can signal future trends in an economy. They provide insights into where the economy is headed by predicting changes before they occur, allowing analysts and journalists to forecast economic performance and make informed decisions. These indicators can help identify potential recessions or expansions by analyzing data trends related to employment, consumer spending, and manufacturing activity.
Market Analysis: Market analysis is the process of assessing the dynamics of a specific market within an industry, focusing on various factors such as demand, competition, and economic trends. This involves gathering and analyzing data to understand market conditions, consumer behavior, and potential business opportunities. It's essential for businesses and journalists alike, as it helps them make informed decisions based on the economic landscape.
Mergers and acquisitions: Mergers and acquisitions (M&A) refer to the processes through which companies consolidate their assets, operations, and resources by either merging together or one company acquiring another. This term encompasses a range of financial transactions that can reshape industries, create synergies, and alter market dynamics, leading to both opportunities and challenges in the business landscape.
Monetary policy: Monetary policy refers to the actions taken by a country's central bank or monetary authority to control the money supply and interest rates in order to achieve macroeconomic goals such as controlling inflation, maintaining employment, and fostering economic growth. It is a crucial tool in managing economic stability, influencing borrowing and spending behaviors in the economy.
Morgan Stanley Research: Morgan Stanley Research is a division of the financial services firm Morgan Stanley, providing in-depth analysis and insights on various sectors, industries, and economies globally. This research is crucial for investors and decision-makers, offering data-driven forecasts and recommendations that influence financial markets and business strategies.
National Bureau of Economic Research: The National Bureau of Economic Research (NBER) is a private, non-profit research organization based in the United States that is dedicated to studying the economy and providing key economic data and analysis. It plays a vital role in business and economic journalism by identifying business cycles, conducting economic research, and disseminating findings that inform public policy and market expectations.
Objectivity in reporting: Objectivity in reporting refers to the practice of journalists presenting information without personal bias, ensuring that news coverage is fair, balanced, and factual. This principle aims to provide a clear and accurate portrayal of events, allowing audiences to form their own opinions based on the facts presented. Maintaining objectivity is crucial in business and economic journalism as it builds trust with the audience and ensures that complex topics are understood without the influence of the reporter's personal views.
Peterson Institute for International Economics: The Peterson Institute for International Economics (PIIE) is a private, nonprofit think tank based in Washington, D.C. that focuses on global economic policy. Established in 1981, PIIE conducts rigorous research and analysis on international economic issues, providing insights that influence policymakers and the public, particularly in the realms of trade, finance, and economic development.
Primary Sources: Primary sources are original, firsthand accounts or evidence created during the time period being studied. They include documents, recordings, artifacts, and other materials that provide direct insight into a specific event or topic. These sources are vital for verifying information, understanding context, and providing credibility in journalism.
Relative Strength Index: The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements, typically used to identify overbought or oversold conditions in a market. This tool helps traders assess the strength of a security's price action by comparing the magnitude of recent gains to recent losses, allowing for better-informed decisions in trading strategies.
Return on investment: Return on investment (ROI) is a financial metric used to evaluate the efficiency or profitability of an investment relative to its cost. It measures the return generated on an investment as a percentage of the initial amount invested, helping stakeholders make informed decisions about where to allocate resources. ROI is crucial for assessing the effectiveness of various business strategies, influencing funding decisions and performance evaluations.
Reuters: Reuters is an international news organization that provides news and information to media outlets, businesses, and governments worldwide. Known for its fast and accurate reporting, Reuters has established itself as a leader in financial journalism, delivering real-time data on markets, economies, and businesses to help inform decision-making processes.
ROI: ROI, or Return on Investment, is a financial metric used to evaluate the profitability of an investment relative to its cost. It is expressed as a percentage and provides insight into how effectively a company is using its resources to generate earnings. This term is crucial in assessing business performance and making informed decisions about resource allocation.
RSI: RSI, or Relative Strength Index, is a momentum oscillator that measures the speed and change of price movements. It is primarily used to identify overbought or oversold conditions in a market, which can help investors make informed decisions about buying or selling assets. By providing insights into market momentum, RSI serves as a crucial tool for analysts in business and economic journalism to interpret market trends and investor sentiment.
Same-store sales: Same-store sales refer to a metric that compares the revenue generated by a company's existing stores over a specific period, typically a year, to the revenue from those same stores during a previous period. This measurement is crucial for assessing the performance and health of retail businesses, as it excludes sales from newly opened or closed locations, providing a clearer picture of organic growth and consumer trends.
Sector-specific metrics: Sector-specific metrics are quantifiable measures that assess performance, health, and trends within a particular industry or sector. These metrics provide valuable insights for analysts and journalists, allowing them to evaluate company performance against industry benchmarks and understand the broader economic implications of sector trends.
Stocks: Stocks represent ownership in a company and are a way for businesses to raise capital by selling shares to investors. When someone buys a stock, they are essentially buying a piece of the company, which entitles them to a share of the profits and potentially some decision-making power through voting rights. Stocks are traded on stock exchanges, and their prices fluctuate based on supply and demand, company performance, and broader economic conditions.
Unemployment figures: Unemployment figures are statistical data that represent the number or percentage of people who are actively seeking work but are unable to find employment. These figures are crucial for understanding the health of an economy, as they provide insight into labor market conditions and can influence economic policy decisions.