– by New Deal democrat Because that services are about 75% of the economy, even if goods production is contracting, since the turn of the MIllennium that has not necessarily meant a recession is in the offing. The economically weighted average to the ISM services and manufacturing indexes has been much more accurate since then. […]

An explanation of over-reaction to new data starts with a principal agent model. The idea is that the forecasts are made by agents who are trying to impress people who pay for the forecasts.  Another, and more important, case is that of professional money managers who are investing other people’s money and trying to convince […]