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Two bad habits, often unconscious, in spinning the latest macro data:
1. Shifting between levels and changes depending on what is most convenient.
2. Using international comparisons (without magnitudes) when convenient, ignoring when not.
1. Shifting between levels and changes depending on what is most convenient.
2. Using international comparisons (without magnitudes) when convenient, ignoring when not.
Example of 1: "Jobs are rising rapidly and real wages are higher than they were pre-pandemic."
The former is a change and the later is a level (and not obvious the later is even true).
Could reverse: "jobs are down relative to pre-pandemic and real wages are falling rapidly."
The former is a change and the later is a level (and not obvious the later is even true).
Could reverse: "jobs are down relative to pre-pandemic and real wages are falling rapidly."
Example of 2: "Inflation is rising everywhere, is a global phenomenon not due to US policy."
But it is also the case that GDP and jobs are rising everywhere too. Does that mean that the US gains in these areas are a global phenomenon that is not due to US policy?
But it is also the case that GDP and jobs are rising everywhere too. Does that mean that the US gains in these areas are a global phenomenon that is not due to US policy?
(BTW, for international comparisons numbers matter. Compared to other advanced economies the US has much more inflation, is towards the upper end in GDP growth, but at the bottom of employment recovery.)
I see prominent economists and columnists make the above errors. It is easier to understand why people feel the way they do about the economy if you approach your economic analysis without changing the yardstick to whatever is most convenient for each different data point.
P.S. A bonus one: using outdated data. People care about prices on April 6 not through the period covered by the latest government data. If you show data through, say, Q4 or even through Feb you're missing a lot. Real wages have likely fallen by ~1.5% in just the last two months.
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Alex Tabarrok @ATabarrok
ยท
Apr 7, 2022
Good thread.