Tuesday, August 3, 2010

The ups and downs of the Economy

You see that every time the stats for the economy comes out then the experts start to get worried or happy depending upon how it is looked at and whether it is a good report or a bad one. When the economy (like the weekly job data, retail sales, productivity and the like) shows signs of going up, all kinds of experts come out and start celebrating and when it goes down, then the same experts say we are in a slump. What wrong with the picture here.

We are told not to look for data in small or one time periods but since the situation is so uncertain and everybody is looking desperately for some clues, and since nobody knows about the future, any glimpse of hope or despair is attacked like that is the trend for the future. It can also be that the mid term elections are coming and there is a scare among democrats of losing one or both the houses or even narrowing their majority. Anyway unless the situation is consistent in a quarter or so, we should not be jumpy on stats which can change drastically from one month to another.

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