No wonder most people don't understand the economy! Often what
might seem good on one hand, has bad side effects on the other. For
example, the stock market rises- one would think that was good! But that
was mostly due to the rising price of oil- bad news. But, often the
price of oil rises because the "experts" believe the economy is
improving and thus more oil will be needed in production- good news! But
that rise in oil prices causes the cost of living to increase- bad
news. But that helps the Gross Domestic Product (GDP)- good news! But
that then causes inflation- bad news. But that inflation means the
economy is improving- good news! But then the Fed becomes concerned
about inflation and raises interest rates- bad news! Which causes the
value of the dollar to improve- good news! But that hurts exports
because now American products cost more overseas- bad news! But that
means foreign products cost less in the US- good news! But that hurts
American companies competitiveness- bad news! We read or hear about real estate news, including sales data, trends, new builds, etc. Yet, how these things are measured often skews our views, and then if enough people become influenced by a particular article, report or point of view, many people begin to behave in some specific manner! Is it good or bad that oil prices are now their lowest in years? If you use oil to heat your home, or if you drive a car, it should be good news, but then some economic report tells us how bad or dangerous an indicator it may be! Low interest rates translate to lower mortgage rates, but it also means lower interest paid by banks on our deposits. If you're retired and on a fixed income, interest rates have a different meaning and significance, perhaps, than it does to younger individuals.
If we think that political analysis and political chatter is often more hype than anything else, the same can certainly be said about analyzing economic news! You can readily see why economic news often seems co confusing. Economic news often seems confusing because it is - - what is good for one consumer, might be bad for another- what is good for one company, bad for another- what might be good for one sector of economy- bad for others.
The stock market is often the most confusing. On days when there is "bad news," the market often goes up, while on some "good news" days, the market sometimes goes down! While the Dow, or the S&P, etc., might go up, it does not mean that the stock(s) you own, will follow suit. Nearly every day, the media reports that a company's financial results either exceeded or failed to meet expectations. Shouldn't that say something to us about expectations and forecasts done by the so - called professionals?
Too often, for the sake of a sound-byte, the media tries to over-simplify economic news. Yet the economy is by definition quite complex. The one issue there should be some agreement on is that high unemployment is not good. Even in this area, should we look at official unemployment rates, under - employment, or the number of people who have given up, and no longer are seeking jobs? Yet even in that case, the "experts" can't agree upon, nor act upon a viable solution.
The best way to think about the economy is this-- the difference between a recession and a depression is that it's a recession when it happens to someone else-- it's a depression when it happens to you!
It is my belief that a healthy economy requires certain factors to be in place - - low joblessness; high consumer confidence; a strong manufacturing sector; and reduced government deficits. That is what we must demand!
If we think that political analysis and political chatter is often more hype than anything else, the same can certainly be said about analyzing economic news! You can readily see why economic news often seems co confusing. Economic news often seems confusing because it is - - what is good for one consumer, might be bad for another- what is good for one company, bad for another- what might be good for one sector of economy- bad for others.
The stock market is often the most confusing. On days when there is "bad news," the market often goes up, while on some "good news" days, the market sometimes goes down! While the Dow, or the S&P, etc., might go up, it does not mean that the stock(s) you own, will follow suit. Nearly every day, the media reports that a company's financial results either exceeded or failed to meet expectations. Shouldn't that say something to us about expectations and forecasts done by the so - called professionals?
Too often, for the sake of a sound-byte, the media tries to over-simplify economic news. Yet the economy is by definition quite complex. The one issue there should be some agreement on is that high unemployment is not good. Even in this area, should we look at official unemployment rates, under - employment, or the number of people who have given up, and no longer are seeking jobs? Yet even in that case, the "experts" can't agree upon, nor act upon a viable solution.
The best way to think about the economy is this-- the difference between a recession and a depression is that it's a recession when it happens to someone else-- it's a depression when it happens to you!
It is my belief that a healthy economy requires certain factors to be in place - - low joblessness; high consumer confidence; a strong manufacturing sector; and reduced government deficits. That is what we must demand!
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