ECONOMY - Obsessing on Reports, Bad or Good?

Finally, someone is asking the correct question.  The real health of any economy is indicated by trends over several months, like quarterly or biannually.  The long view is always a better gauge of how we are doing.

"Why obsessing over economic indicators may hinder economic improvement" PBS Newshour 3/6/2014

Excerpts

GWEN IFILL (Newshour):  Every month, we bring you news of the latest jobs report, generally interpreted as a sign of economic health or more.  We will tell you about the latest of that tomorrow, but how useful are these numbers, really?

NewsHour economics correspondent Paul Solman wondered that too.  The answer is part of Paul’s ongoing reporting Making Sense of financial news.

WOMAN:  Breaking news: We have a new jobs report that missed expectations by quite a lot.

PAUL SOLMAN (Newshour):  The monthly jobs report — it’s released by the Bureau of Labor Statistics the first Friday of every month — is big news.

WOMAN:  The market took off this morning, after a far better April jobs report than anyone expected.

PAUL SOLMAN:  The report moves financial markets, prompts instant analysis.

MAN:  It wasn’t a great report, but it was not a terrible report.

PAUL SOLMAN:  And it spawns spin from the right and left.
----
ZACHARY KARABELL, Author, “The Leading Indicators”:  The reason we have an unemployment rate was because of 1929.  And it was because there was a crisis that was clearly unfolding, but there was no sense of just how bad things were, that Hoover himself, who was kind of an apostle of scientific management of government, said, OK, fine, let’s fund the Bureau of Labor Statistics sufficiently to create this — to create a number that gives some sense of how bad things are.

Lo and behold, that number was quite bad.  And Franklin Roosevelt used those preliminary numbers as a way of defeating Hoover in 1932.

PAUL SOLMAN:  Quite bad turned out to be an unemployment rate of 25 percent, which only dropped to single digits with the huge industrial outlays of World War II.

Yet today, though survey methods have evolved, essentially, the same data still guide us, says Karabell, at our peril.

ZACHARY KARABELL:  They’re meant to measure industrial labor forces that worked in factories.  They’re not really well-suited to a kind of 21st century, high-service economy, fluid labor force that’s moving a lot, that isn’t working in large factories for large companies.  And those numbers bear the stamp of the time they were invented.