Why No One Knows Where the Economy Really Stands
Excerpts
In the corporate world the first and most critical item for anyone taking over a troubled institution is determining where that company stands financially. Identifying and assessing cash on hand against negative cash flow, sorting out divisions that are hemorrhaging badly from those making a profit, and items such as outdated inventories that need to be written off against the costs of the products that are still selling—all of that is crucial information, needed immediately if not sooner. What the educated executive is looking for is where the company really stands on that given day. Only then can a baseline for performance be drawn and a way established to return the company to long-term profits....
The lack of real numbers and transparency became more than apparent last week, when the consumer spending numbers for September were released showing a 0.5% drop. Wall Street's reaction was predictably negative, while numerous pundits added their multiple opinions about whether this meant the recession had truly ended. But the newly released numbers simply added confusion to the irony of it all: The day before September's retail results came out, the most recent GDP numbers had shown a strong rebound—a 3.5% annualized growth rate.
In the housing market, new studies showed home prices stabilizing and even increasing slightly, but sales of new homes still fell by 3.6%. (Existing homes were up nearly 10% from the previous month.) As for employment, many have written that there is finally a slowing of the new weekly jobless claims, followed by the net loss of jobs in any given month. But even here, one of the most shocking stories about the nation's overall employment picture came out a month ago and was widely ignored by most news media. This brings into question how the Bureau of Labor Statistics determines the employment numbers.
Link to Full ArticleVery interesting and well worth the read. It explains what numbers we could be looking at rather than the current ones to get a better grasp on what parts of the economy are actually improving or not, and which states and industries are improving the fastest.
