I have heard many cheerleader reports attempting to claim the recession is over and the recovery has begun. I’m not so certain especially when these people note the stock market as the leading indicator. This article from CNNMoney.com explains why this cheerleader approach is flawed (my bold): Several experts point out than many of the relatively strong earnings reports helping to lift the markets in recent days are being driven by cost cuts, rather than strong revenue growth that would be a better indicator of consumers and businesses being willing to spend again. If businesses keep cutting costs to make the numbers that Wall Street wants to see, that can… Read More
Continue ReadingWhy Is Economic News Always Surprising?
Isn’t this an old marketing trick – include “surprising,” “stunned,” or “unexpected” in a headline? It seems to me that every time an economic report comes out, we are presented with one of these words to describe the data. The latest example comes from cnnmoney.com today: U.S. construction spending unexpectedly posted its biggest increase in eight months in April, advancing for a second straight month as the private sector put money into both residential and nonresidential projects, according to a government report on Monday. Oh to be able to surprise a sales manager with an unexpectedly lower sales forecast! If the experts are consistently surprised, what credentials do they have… Read More
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