by Divorced one like Bush
US Initial jobless claims decline larger than expected in May 31 week (6/5/08)
Mortgage finance giant suffers much larger-than-expected loss due to reserves for credit losses and slashes its dividend to preserve capital. (8/8/08)
Factory orders decline more than expected in August (10/2/08)
Retail sales for September posted its steepest fall in 3 years, down by 1.2%, larger than the expected 0.7% decline…The New York Fed manufacturing index plunged to a record low for October, sharply worse than expectations to -24.62…Meanwhile producer prices climbed higher than forcast…(10/16/08)
The University of Michigan consumer sentiment survey posted its steepest drop on record, collapsing far more than expected to 57.7 in October… (10/18/08)
A larger than expected decline in building approvals reflects continued investor caution due to high interest rates, economists say. (Australia, 9/30/08. )
So, what does it say when we read headlines that start with “Larger than expected decline”? Really.
What world, because it is a world phenomenon as shown with the Australia opening news line, are these people living in such that what they read in the data surprises them? Should we not be concerned that those who are being relied on to manage our economy have not expected what they are now seeing? Reading many articles starting off with that phrase “Larger” or “bigger” or “greater” “than expected decline” does not bode well for all the analysis that has been relied on by the managers (would this include investors?) of our economy. I mean, I posted here in comments some time ago that my flower shop has been seeing a steady decline since August 1996. I noted when the first quarter reports for this year came out, based on my flower shop, that we would see some good numbers, but it would only be a burp of pent up desire to spend and should not be considered positive because of the major drop in April and May (usually one of the largest months for flowers).
Do you remember the commentary on how the rising oil prices would not hurt the economy because it was still “relatively” cheap? Was the talk that if oil got back down to $70/barrel then we would know the pricing was speculation? Well? What, are we not concerned now to know if the oil price rise was speculation or not? Or is this another “larger than expected decline”?
Yet, here we are reading commentary that, if we are honest and real, should be giving us great pause as congress formulates policy. Such commentary of surprise as numbers are reported should be raising questions such as: Are we monitoring relevant data for our purpose? Are our theories of what is significant regarding our economic intent valid? Is the data an accurate description of what is happening in our economy? And, the most basic: Why are we surprised? Why were our expectations wrong? Should we be looking for a different school of economic thought than the one that has dominated? (Some time ago, here in RIland an economist from URI thought that tolls collected for the Newport Bridge was a good indicator for our state economy. He found that he was correct.)
Is now the time to broaden the discussion or are we going to wait for more unexpected surprises?