Economic data and financial news might be the most analyzed and,
at the same time, the least truly understood information in the news
today. For example, is the fact that China's economy continues to grow
good or bad news, and why? One analyst might report that China's
continued growth is indicative that there is still growing worldwide
demand, which should be good for the world's economies. At the same
time, other analysts will see this growth as occurring as a result of
the Chinese government pumping large infusions of monies into their
economy, and at the same time, artificially keeping the value of the
Chinese currency "cheaper" than it would be if it were permitted to be
freely traded on world markets. Still another economic analyst states
that this growth is causing runaway inflation and an overheated economy,
that the analyst then refers to as "The flip side of the American
economic problems." In recent times, when it appears the Chinese economy faces challenges, etc, some claim it is positive for America, while others focus on something similar to a trickle - down effect. The falling price of oil is proclaimed by some as bad for the economy, while nearly all consumers have benefited from lower gas prices at the tank, and oil prices to heat homes!
The economic analysts breathtakingly await the various weekly "reports," including the jobs reports (which should actually be referred to as the 1) Those submitting new preliminary unemployment applications; and 2) The official unemployment rate. Then, they argue about the numbers, which are invariably either better or worse than "expectations." Whose expectations, and why do we continue to refer to them if the actual numbers are almost either better or worse than anticipated? The official unemployment or joblessness rate is another curious number because it only includes those that are still actively searching for employment- that is, are presently collecting unemployment benefits. Therefore, this does not refer our count the under-employed, the consultants whose income have dwindled, commissioned salespersons incomes, or small business owners (who are ineligible for unemployment benefits). Many believe that the approximately 5% official rate becomes closer to 9 or 10%, when these situations are also included. While one side of the issue says fairness demands a higher minimum wage, the flip side of issue, is the possible impact on consumer prices, employment habits (will businesses employ fewer people, or give them fewer hours?), or replacing employees with computerization, etc. Fast - food businesses in Europe have used digital ordering kiosks for years, which reduces the number of employees being paid, and certain American banks, are already testing ATM-type teller stations, within their branches!
The inflation rate, or the manner in which the Cost of Living rate are calculated is another controversial situation. When gas at the fuel pump, and home heating oil have risen dramatically, and airfares are significantly higher, and tolls and train fares have jumped, and food per ounce is significantly more money, am I the only one that wonders how the official inflation rate is stated as being very, very low. Terms like seasonally adjusted, commonly used, essentials, non essentials, etc., further confuse the issue. Suffice it to say that I doubt there are too many people who believe that inflation number. Of course, for we conspiracy theorists, we might find it curious that the same government who has a vested interested in keeping the official numbers low (political, Social Security Indexing, government union contracts, etc), are also the ones that calculate this index.
One month we show improvement in housing starts or housing sold. Another month a drop. However, is this an increase or drop from what levels, and how long does a homeowner have to wait to have his home sold today versus a few years ago, and at what price point.
The point of this discussion is simply that we should all be cautious and beware when we see these financial and economic indexes and numbers. While they no doubt, may have some limited value, I question whether that value makes up for all the 'spin," confusion, and misinformation that we receive whenever any of this data is released.
The economic analysts breathtakingly await the various weekly "reports," including the jobs reports (which should actually be referred to as the 1) Those submitting new preliminary unemployment applications; and 2) The official unemployment rate. Then, they argue about the numbers, which are invariably either better or worse than "expectations." Whose expectations, and why do we continue to refer to them if the actual numbers are almost either better or worse than anticipated? The official unemployment or joblessness rate is another curious number because it only includes those that are still actively searching for employment- that is, are presently collecting unemployment benefits. Therefore, this does not refer our count the under-employed, the consultants whose income have dwindled, commissioned salespersons incomes, or small business owners (who are ineligible for unemployment benefits). Many believe that the approximately 5% official rate becomes closer to 9 or 10%, when these situations are also included. While one side of the issue says fairness demands a higher minimum wage, the flip side of issue, is the possible impact on consumer prices, employment habits (will businesses employ fewer people, or give them fewer hours?), or replacing employees with computerization, etc. Fast - food businesses in Europe have used digital ordering kiosks for years, which reduces the number of employees being paid, and certain American banks, are already testing ATM-type teller stations, within their branches!
The inflation rate, or the manner in which the Cost of Living rate are calculated is another controversial situation. When gas at the fuel pump, and home heating oil have risen dramatically, and airfares are significantly higher, and tolls and train fares have jumped, and food per ounce is significantly more money, am I the only one that wonders how the official inflation rate is stated as being very, very low. Terms like seasonally adjusted, commonly used, essentials, non essentials, etc., further confuse the issue. Suffice it to say that I doubt there are too many people who believe that inflation number. Of course, for we conspiracy theorists, we might find it curious that the same government who has a vested interested in keeping the official numbers low (political, Social Security Indexing, government union contracts, etc), are also the ones that calculate this index.
One month we show improvement in housing starts or housing sold. Another month a drop. However, is this an increase or drop from what levels, and how long does a homeowner have to wait to have his home sold today versus a few years ago, and at what price point.
The point of this discussion is simply that we should all be cautious and beware when we see these financial and economic indexes and numbers. While they no doubt, may have some limited value, I question whether that value makes up for all the 'spin," confusion, and misinformation that we receive whenever any of this data is released.
No comments:
Post a Comment