(Mis)leading Indicators

[longknife]

Why Our Economic Numbers Distort Reality

I'm not an economist but have always wondered why a set of numbers like this should have a political impact.

Economic numbers have come to define our world. Individuals, organizations, and governments assess how they are doing based on what these numbers tell them. Economists and analysts loosely refer to statistics measuring GDP, unemployment, inflation, and trade deficits as “leading indicators” and subscribe to the belief that these figures accurately reflect reality and provide unique insights into the health of an economy. Taken together, leading indicators create a data map that people use to navigate their lives. That map, however, is showing signs of age. Understanding where the map came from should help explain why it has become less reliable than ever before.

Read the full piece @ Zachary Karabell | Why GDP and Other Leading Economic Numbers Distort Reality | Foreign Affairs

 

[william the wie]

Read upon how Nigeria became the largest economy in Africa literally overnight .

 

[SteadyMercury]

Read upon how pinhead Rshemr believes having a certain percentage of people living paycheck to paycheck is an indicator of a poor economy and that everyone who is skeptical must be subscribers of right-wing conservative websites.

 

[oldfart]

Why Our Economic Numbers Distort Reality

I'm not an economist but have always wondered why a set of numbers like this should have a political impact.

Economic numbers have come to define our world. Individuals, organizations, and governments assess how they are doing based on what these numbers tell them. Economists and analysts loosely refer to statistics measuring GDP, unemployment, inflation, and trade deficits as “leading indicators” and subscribe to the belief that these figures accurately reflect reality and provide unique insights into the health of an economy. Taken together, leading indicators create a data map that people use to navigate their lives. That map, however, is showing signs of age. Understanding where the map came from should help explain why it has become less reliable than ever before.

Read the full piece @ Zachary Karabell | Why GDP and Other Leading Economic Numbers Distort Reality | Foreign Affairs

OK, it's good to periodically be reminded that economic statistics are not perfect. There are constraints on what information can be gathered and controversy about what it means. But where do you go from there?

The quote you used in your post included a number of factual errors. For example, unemployment is a lagging indicator, not a leading indicator. This indicates to me that the author knew little of the subject and that Foreign Affairs does not fact check its articles. There is an ongoing robust debate about how to improve economic statistics which the author obviously does not participate in. So does the author have any real point at all, other than appearing both smug and clueless? As an economist or statistician, Mr. Karabell appears to be a pretty bad sociologist.

Are there any particular economic statistics that YOU think can be improved? That would be a good post. And one that can be answered, which Karabell's gratuitous hatchet job on two professions cannot be.

PS Karabell is shilling for his book. If you read the comments of his article, it got pretty well panned. My faith in Foreign Affairs readers is restored, but FA still should never have published such a lousy piece with such a blatant commercial motive in the first place.

 

[william the wie]

The variance between PPP and computed GDP should be within +/- x%, x<10. And that variance is huge

The lack of a VAT means that a large but unknown amount of US investment, in the form of used but usable capital equipment, has been subtracted from rather than added to US GDP for decades. In China investment in unneeded buildings has been added to GDP for decades. Judging from the number of permanent residence, > $500,000, cash purchases China could pop at any moment due to the 10-20 trillion difference in actual vs. computed GDP between the world's two largest economies. As in if the US really finds China's behavior annoying stopping US support for the Malacca Straits anti-piracy campaign could cause collapse.

So, how is it possible to correct this problem and is it in our national interests to do so?

 

[Rshermr]

Read upon how pinhead Rshemr believes having a certain percentage of people living paycheck to paycheck is an indicator of a poor economy and that everyone who is skeptical must be subscribers of right-wing conservative websites.

Read how SM lies throughout his post. Since I never said what you have said I did relative to people living paycheck to paycheck, SM. Ever. Really, you should stop the lying. Makes you look like a person with no integrity. Which you are. Prove me wrong. Provide thread and post #, me boy, or simply admit you are lying. Or, more likely, just go away.
Relative to you being a con, I did not say you subscribe to right wing conservative websites. I have no idea what you subscribe to. But my opinion is that you are a con, based on the ignorance of your posts, and your posts.
Sorry you are incapable of posting something of substance relative to the subject of the thread. Again, typical of cons.

 

[Toro]

Why Our Economic Numbers Distort Reality

I'm not an economist but have always wondered why a set of numbers like this should have a political impact.

Economic numbers have come to define our world. Individuals, organizations, and governments assess how they are doing based on what these numbers tell them. Economists and analysts loosely refer to statistics measuring GDP, unemployment, inflation, and trade deficits as “leading indicators” and subscribe to the belief that these figures accurately reflect reality and provide unique insights into the health of an economy. Taken together, leading indicators create a data map that people use to navigate their lives. That map, however, is showing signs of age. Understanding where the map came from should help explain why it has become less reliable than ever before.

Read the full piece @ Zachary Karabell | Why GDP and Other Leading Economic Numbers Distort Reality | Foreign Affairs

Economists don't refer to GDP, unemployment, inflation and trade deficits as "leading indicators."

 

[percysunshine]

Aren't these the numbers that the Federal Reserve is using to micro-manage the economy?

What could possibly go wrong?

.