US Economy 2nd Qtr Growth: 3.3%/yr

[The Dark]

Perhaps there needs to be a shift away from using single-value statistics to describe the economy, to something more nuanced. For example, you can say that the US per-capita GDP is something like $35,000, or you can say that the income distribution is such-and-such a probability density (log-normal distribution, IIRC?). The latter says more than the former, and permits one to focus on everyone simultaneously rather than simply a single average person.

There's already an income distribution measurement - the Gini coefficient, which is a ratio of the areas under a Lorenz curve, which shows what proportion of resources is held at each percentile of the population. A line of perfect equality gives a Gini of 0.000, and perfect inequality is 1.000. The UN's estimated Gini for the United States is 0.408. Denmark has the lowest in the world at 0.247, Namibia the highest at 0.743. Some other Gini's of note are Canada's 0.326, UK's 0.360, and Germany's 0.283. In general, the lowest Ginis occur in Continental Europe, the highest in Africa, Central America, and South America.

[Broomstick]

Perhaps there needs to be a shift away from using single-value statistics to describe the economy, to something more nuanced.

Such things do exist (I confess I do not entirely understand what The Dark was speaking of, but it's clearly one such) but outside of very limited circles nobody knows about them and the media certainly doesn't talk about them.

[Big Orange]

If it weren't for the local Goodyear plant, this town would really be up shit creek.

Which the fools will probably pack up and move to Eastern Europe/India/China before the decade's out because it's more 'dynamic'.

[J]

David Rosenberg's commentary (PDF file) He's an analyst at Merrill Lynch.

Highlight:

For domestic industries, profits are down 14.4% year-over-year. But in
the profits section of the report, we see that domestic non-financial profits were
actually down sharply at a 22% annual rate. The reason why the total earnings
headline was held to just a -9.2% pace was because, in Alice-in-Wonderland
fashion, profits in the financial sector were reported to have surged at (get this), a
27% annual rate. Are you kidding me?

[The Dark]

Perhaps there needs to be a shift away from using single-value statistics to describe the economy, to something more nuanced.

Such things do exist (I confess I do not entirely understand what The Dark was speaking of, but it's clearly one such) but outside of very limited circles nobody knows about them and the media certainly doesn't talk about them.

To be honest, I don't completely understand it myself (I understand the principle, but I'm horrible at the calculations involved). I know what it's saying, in general, but even the raw Gini doesn't say everything.

To explain - the Lorenz curve is drawn on a chart that has the population percentile on one axis and the net wealth percentile on the other axis. A 45 degree line up the chart describes perfect equitability in wealth - each person has exactly the same wealth as every other. The Lorenz curve is drawn on that chart to reflect the actual situation in a country (for example, 50% of the country may only hold 20% of wealth; 75% hold 40%, et cetera). The Gini coefficient is the ratio of the area between the Lorenz curve and the perfect equitability line to the area outside the Lorenz curve. The reasons it's not popularly used are multiple:
1. It's not commonly understood, and it is moderately complicated to calculate
2. It doesn't describe everything. A society with a moderately prosperous middle class, a dirt-poor lower class, and an obscenely wealthy upper class could have a smaller Gini than a society with a large, relatively poor underclass and large, moderately wealthy upper class. It takes analysis to figure out the full situation, and most people can't do that analysis.
3. It's not a "pretty" number (3.3% increase), and it's one that shows a trend in American economics that most of the powerful people want to deny exists, since the US Census estimate has gone from 0.397 in 1968 to 0.463 last year (which is higher than the UN estimate).

[The Dark]

ghetto edit: where I said "wealth" above, replace with "income." Stupid me is sleepy and misread notes.

[Master of Ossus]

The real problem with the Gini coefficient is that it moves INCREDIBLY slowly, and it's very difficult to calculate in small areas or sub-sets of the country. That's for several reason, but a big one is that people self-select into areas that have similar income levels to their own, so if you calculated the Gini coefficient for an individual county or a town it would likely be very small, but that wouldn't accurately reflect the situation in the surrounding land, as well.

Actually, among economic circles, the study of income inequality is a huge topic, with many, many volumes of papers published annually. It's just not an area that's commonly reported to the general public because most of the studies that are done are not responsive so much to year-to-year changes, but to shifts in general trends (again, since income distribution by almost any measure changes slowly over a period of years or decades, as opposed to things like unemployment that can be measures monthly or even weekly, at times).

[Ace Pace]

These announcements are important, but not as promising as hearing "unemployment down," "average cost of education in decline," "real working and middle class incomes on the rise."

And since I haven't seen it posted in this thread, a few bits on that.

After the silver lining of yesterday's GDP figure, the dark cloud—July spending was flat, incomes were down, and inflation was high. The most disturbing of the three datapoints may be the larger than expected drop in incomes. With the effects of the stimulus all but exhausted and export growth set to slow, it's difficult to see where the mojo in the economy will come from.

Source. Gee, what a suprise that the stimulus was just a temporary smoke screen.

The Gulf of Mexico is picking up the pace of preparations for what could be major hurricane Gustave at landfall. Offshore drilling operations have largely ceased and platforms are being evacuated ahead of the storm.

Source

[Big Orange]

In the 1980s Margaret Thatcher helped put Britain in fourth place in GDP, but poverty under her actually doubled. It kind of renders the GDP level worthless if most GDP belongs to relatively few people.

[Admiral Valdemar]

It's healthier than expected, just anyone expecting the good times to carry on as they have for the last near two decades is in for a shock.

Good times? What are those? I haven't seen good times in this country since 2000. It's been all steadily downhill or flatine

To elaborate, this is in reference to the UK's economic growth in general, not my personal experience (I've only had a full time job since last August) or that of others I know. This, if anything, is another knock against GDP as a measure of prosperity and happiness. The country selling more stuff each year and people owning more of said stuff, does not a well off or happy populace make. In fact, there are plenty of studies showing owning more shit doesn't do anything past a certain measure of comfort and I sure don't see how multinationals bolstering the nation's exports and retaining the tasty profits is somehow indicative of me being better off.

[Broomstick]

The real problem with the Gini coefficient is that it moves INCREDIBLY slowly, and it's very difficult to calculate in small areas or sub-sets of the country. That's for several reason, but a big one is that people self-select into areas that have similar income levels to their own, so if you calculated the Gini coefficient for an individual county or a town it would likely be very small, but that wouldn't accurately reflect the situation in the surrounding land, as well.

Actually, among economic circles, the study of income inequality is a huge topic, with many, many volumes of papers published annually. It's just not an area that's commonly reported to the general public because most of the studies that are done are not responsive so much to year-to-year changes, but to shifts in general trends (again, since income distribution by almost any measure changes slowly over a period of years or decades, as opposed to things like unemployment that can be measures monthly or even weekly, at times).

Although I am not an economist, I do appreciate that some of these figures are difficult to calculate and of questionable use. However, I don't find "it's hard" an acceptable excuse for not trying. Economists would do a great service to humanity if they could come up with better ways of talking about, describing, monitoring, and tracking economic trends and features. I also realize that we are not yet at that point, and it may be quite awhile before we are.

Clearly, any particular number you choose to use to describe the economy - GDP, unemployment, inflation, whatever - is inadequate to truly describe such a complex system. I don't have an answer here, but I can tell you what I'd like to see, which is useful information that I can use, as a layperson, to make decisions and/or plan for my future. If we're in a recession I will be making different decisions than if we're in an economic boom. If unemployment and inflation are rising and not a lot of new jobs are expected that may change how I set the family budget, what I choose to spend my money on, how aggressively (or even whether) I seek a new/better job at this time... whereas in an economic boom I may be much more willing to take risk. I don't need to know the actual math behind how economists arrive at their decisions, but I do need to trust the profession at a certain level. I'd like to trust that what I hear from economists is sound, but all too often it seems at odds with my perceptions of reality around me. If the economy is "sound" or "doing great" or "growing" how come we also hear about tens of thousands of layoffs and that average incomes are falling? That does not add up.

I will also add that I understand that there are different schools of economic thought, although I don't pretend to understand the details of any of them. I think part of the problem (and some of the hostility) has been that the current party in power emphasizes whatever economists/systems favor their ideology rather than what may more accurately reflect the real world, or be more useful, even if it's not flattering to the politicians.

[Master of Ossus]

Although I am not an economist, I do appreciate that some of these figures are difficult to calculate and of questionable use. However, I don't find "it's hard" an acceptable excuse for not trying. Economists would do a great service to humanity if they could come up with better ways of talking about, describing, monitoring, and tracking economic trends and features. I also realize that we are not yet at that point, and it may be quite awhile before we are.

"It's hard" is a totally reasonable excuse if the costs of implementing effective measuring outweigh any benefits that you generate by effective implementation--real-time data gathering is ludicrously expensive on an economy, which is why only a very few government agencies bother to do that, and only for selective measures.

Clearly, any particular number you choose to use to describe the economy - GDP, unemployment, inflation, whatever - is inadequate to truly describe such a complex system. I don't have an answer here, but I can tell you what I'd like to see, which is useful information that I can use, as a layperson, to make decisions and/or plan for my future. [snip]

What "useful information" are you asking for, exactly? Do you want an economist to predict job availability in your area, estimate your wages going forward, etc? That's what financial planners are for, and there's a reason that they're expensive. There are ridiculous amounts of economic data available, for free, from the government and much or all of it is potentially useful even at the individual household level. Can you specify precisely what it is that your after? And, frankly, the sorts of requests that have been floating around this thread are meaningless at the household level. Who cares if income distribution is very high? Does it affect your life if Warren Buffet makes a lot of money or a little?

I will also add that I understand that there are different schools of economic thought, although I don't pretend to understand the details of any of them. I think part of the problem (and some of the hostility) has been that the current party in power emphasizes whatever economists/systems favor their ideology rather than what may more accurately reflect the real world, or be more useful, even if it's not flattering to the politicians.

I have never heard of a political party that did not emphasize economic data that was good for whatever agenda they were trying to push, but what does that have to do with the existence or availability of economic data?

[Broomstick]

Although I am not an economist, I do appreciate that some of these figures are difficult to calculate and of questionable use. However, I don't find "it's hard" an acceptable excuse for not trying. Economists would do a great service to humanity if they could come up with better ways of talking about, describing, monitoring, and tracking economic trends and features. I also realize that we are not yet at that point, and it may be quite awhile before we are.

"It's hard" is a totally reasonable excuse if the costs of implementing effective measuring outweigh any benefits that you generate by effective implementation--real-time data gathering is ludicrously expensive on an economy, which is why only a very few government agencies bother to do that, and only for selective measures.

"Too expensive to be cost-effective" is a good reason not to do something, but that is not what I said. I said "it's hard" is not a reason to avoid the attempt - if the attempt determines it is not cost-effective that's fine, but I had the impression that cost was not the problem here, it was just that no one could be bothered because it was too much effort.

If we don't have the computer power (yet) to make this practical that's a good reason, too, but that's not what I heard. I heard "it's hard'. Well, yeah, that's why we have to pay people to do it, instead of them doing it for free for their own amusement.

Clearly, any particular number you choose to use to describe the economy - GDP, unemployment, inflation, whatever - is inadequate to truly describe such a complex system. I don't have an answer here, but I can tell you what I'd like to see, which is useful information that I can use, as a layperson, to make decisions and/or plan for my future. [snip]

What "useful information" are you asking for, exactly? Do you want an economist to predict job availability in your area, estimate your wages going forward, etc? That's what financial planners are for, and there's a reason that they're expensive. There are ridiculous amounts of economic data available, for free, from the government and much or all of it is potentially useful even at the individual household level. Can you specify precisely what it is that your after? And, frankly, the sorts of requests that have been floating around this thread are meaningless at the household level.

If my current regions - let's say "the Great Lakes region" - is forecast to have one sort of economy and another area, say, "New England" is forecast to have a much better outlook regarding, say, job creation, rate of inflation, cost of living, etc. it might well affect whether I decide to stay put where I am or move to New England. If the economy is shit all over the US I'll stay put and hunker down. That's not "household" level, but it can certainly affect decisions made by my household.

And yes, there is a "ridiculous amount" of information available, but what makes you think the average citizen is able to shift through it and derive something meaningful from it? Or even determine what on-line information is sound and what is bogus?

Who cares if income distribution is very high? Does it affect your life if Warren Buffet makes a lot of money or a little?

If 90% of the wealth is concentrated in the hands of, say, 10% of the people then yes, it DOES matter because that means 90% of the population is left with shit. That's not the society I want to live in, if I have a choice.

I will also add that I understand that there are different schools of economic thought, although I don't pretend to understand the details of any of them. I think part of the problem (and some of the hostility) has been that the current party in power emphasizes whatever economists/systems favor their ideology rather than what may more accurately reflect the real world, or be more useful, even if it's not flattering to the politicians.

I have never heard of a political party that did not emphasize economic data that was good for whatever agenda they were trying to push, but what does that have to do with the existence or availability of economic data?

There is emphasizing the positive vs. attempting to discredit anyone who doesn't toe the line. The current crew is the latter, not the former.

[Illuminatus Primus]

I think Ossus is concerned with retributive and spiteful income redistribution. The kind of reasoning that, regardless of the situation and circumstances, people being really rich IS BAD. Or its brother attitude, corporate incomes being high means EVIL STUFF. Now does that mean they have more ethical obligations to an equitable society IF there are a lot of needy people, if taxes must be raised? Yes. Income distribution is a problem in particular because growth has not trickled down through the entire society; sectors are being left behind while others are taking off. This is a problem for extrinsic reasons, because a well-defined class of inheritably wealthy individuals is deleterious to functioning liberal democracy. But income distribution alone doesn't tell you all that.

[Broomstick]

I agree, IP, if I am understanding you correctly.

I do not mind that there are some filthy, filthy rich people in the world. Wealth alone does not make a person evil, any more than poverty makes a person a saint. I am opposed "retributive and spiteful income redistribution" as you put it.

Frankly, I'd be just as disturbed by a society were everyone had exactly the same income/wealth/resources because I don't find that normal or natural and I'd have to wonder what sort of coercive forces are at play.

What concerns me right now is not how much money Bill Gates or Warren Buffet or the Bush have, what concerns me is that the infrastructure of this nation is being neglected and the needy left behind while the rich are getting tax breaks. Those who enjoy the benefits of society are also under some obligation to help maintain it. I'd prefer that the wealthy act out of enlightened self-interest (there were wealthy philanthropists before the days of tax breaks, so it can happen) but that's not realistic. I've often tried to point out to people that it's cheaper to help pay (via taxes) for your neighbors' children's education as children than to pay for their incarceration as uneducated adults who turn to crime from lack of alternatives. This message is too often lost. People can be greedy bastards and lose sight of the fact that "social programs" benefit them in many ways, even if they don't use them directly.

I don't mind the rich staying rich, but I do mind when they expect to be able to exist in the world without contributing to the common good. It's not a problem of wealth so much as greedy and selfishness.

I don't know what an ideal income distribution profile would look like (I'm not sure anyone does), but there are extremes that, while not a certain marker of a problem, can be a symptom or indicator that something is amiss.

[Lancer]

"Too expensive to be cost-effective" is a good reason not to do something, but that is not what I said. I said "it's hard" is not a reason to avoid the attempt - if the attempt determines it is not cost-effective that's fine, but I had the impression that cost was not the problem here, it was just that no one could be bothered because it was too much effort.

If we don't have the computer power (yet) to make this practical that's a good reason, too, but that's not what I heard. I heard "it's hard'. Well, yeah, that's why we have to pay people to do it, instead of them doing it for free for their own amusement.

I think you may have spun off onto a tangent. Calculating the Gini coefficient isn't that difficult if you have the relevant raw data and a powerful statistics suite. However, using the Gini coefficient to draw useful conclusions is extremely difficult for the same reason that taking GDP growth alone to determine the overall health of the economy is difficult. You're taking a complex problem with multiple dimensions, and trying to reduce it to a single all-encompassing figure.

If my current regions - let's say "the Great Lakes region" - is forecast to have one sort of economy and another area, say, "New England" is forecast to have a much better outlook regarding, say, job creation, rate of inflation, cost of living, etc. it might well affect whether I decide to stay put where I am or move to New England. If the economy is shit all over the US I'll stay put and hunker down. That's not "household" level, but it can certainly affect decisions made by my household.

And yes, there is a "ridiculous amount" of information available, but what makes you think the average citizen is able to shift through it and derive something meaningful from it? Or even determine what on-line information is sound and what is bogus?

National Compensation Survey: Occupational Wages in the East North Central Census Division, July 2006
National Compensation Survey: Occupational Wages in the New England Census Division, June 2006
Regional Activity, U.S. Housing Market Conditions 1st Quarter, 2008
Regional and State Employment and Unemployment Summary
A list of various federal agencies that generate statistical data

If 90% of the wealth is concentrated in the hands of, say, 10% of the people then yes, it DOES matter because that means 90% of the population is left with shit. That's not the society I want to live in, if I have a choice.

That's not very informative.

If I take a population as you describe, then arbitrarily double the income of everybody in that population (holding the rest of the world more or less constant), then they're better off despite the national distribution of income remaining constant. In fact, the Gini coefficient mentioned earlier would be exactly the same for this population as it was before, despite suddenly seeing their purchasing power doubled.

In an alternative scenario, the assets of the top 10% who hold 90% of the income could be destroyed through war or natural disaster. Now, income distribution is far more "equal", but nobody is actually any better off.

There is emphasizing the positive vs. attempting to discredit anyone who doesn't toe the line. The current crew is the latter, not the former.

The current crew's attempts to discredit anyone who doesn't toe the line is hardly limited to published economic indicators, and even if it was, the main page of the BLS's Economic Releases section has a collection of economic indicators which hinder, if not completely undermine, the current crew's attempt to paint a rosy picture of the economy.

[Coalition]

If 90% of the wealth is concentrated in the hands of, say, 10% of the people then yes, it DOES matter because that means 90% of the population is left with shit. That's not the society I want to live in, if I have a choice.

If I take a population as you describe, then arbitrarily double the income of everybody in that population (holding the rest of the world more or less constant), then they're better off despite the national distribution of income remaining constant. In fact, the Gini coefficient mentioned earlier would be exactly the same for this population as it was before, despite suddenly seeing their purchasing power doubled.

In an alternative scenario, the assets of the top 10% who hold 90% of the income could be destroyed through war or natural disaster. Now, income distribution is far more "equal", but nobody is actually any better off.

For the first case, where the bottom 90% now hold 20% of the wealth,and the top 10% hold 80%, the Gini index will actually increase.

(basic Gini description for those who don't know and only want a basic idea of the term; if they want more, google)
The Gini ideal is a triangle, where left to right across the X axis is fraction of the population (sorted by lowest earners on the left, and highest on the right), and top to bottom of the Y axis is fraction of the income owned by the total so far.

The bottom left corner represents 0% of the population, and 0% of the total wealth is owned. Top right is 100% of the population, controlling 100% of the wealth. If wealth is divided equally, then at 50% of the population there will be 50% of the wealth controlled. Assuming the total area of the square is 1, then the Gini index for equal income distribution is .5.

- Assuming the 10% control 90% of the resources, and 90% control 10% of the resources, this is basically two triangles and a square. The triangles measure .9 by .1 each, and the square is .1 by .1 (think about it and draw it out). Total area of the triangles is .09, plus the square is .01, for a total area of .1.
- Assuming 20% of resources controlled by 90% of the pop, and 80% controlled by 10%, there are two triangles, one measuring .9 by .2 and the other measuring .1 by .2, with a rectangle measuring .1 by .2. Total area is .09 plus .02 for .11 for the triangles, plus .02 for the rectangle, for a total of .13.

So the Gini index has increased by 30% due to the top 10% giving up 11.11% of their income to the rest of the population.

Now if you mean that everyone in that population would have their incomes doubled, then chances are the market will make up for that fact. Higher income means that someone else is paying more for their goods, and those prices have to be passed along. If they are passed along to other nations (aka people outside the Gini index group), then yes, you are right that Gini doesn't change. If they are passed along to people inside the Gini group (i.e. a farmer earns more because he increases the price of food), then the doubled income doesn't mean anything because the cost of living has doubled.


Now if the top 10% lost all their property due to disaster (man-made or natural), then the group as a whole has lost 90% of its resources. That hurts no matter who owns the resources.

[Master of Ossus]

"Too expensive to be cost-effective" is a good reason not to do something, but that is not what I said. I said "it's hard" is not a reason to avoid the attempt - if the attempt determines it is not cost-effective that's fine, but I had the impression that cost was not the problem here, it was just that no one could be bothered because it was too much effort.

But that's not what's going on. There is an incredible amount of data and summary statistics that are already available.

If we don't have the computer power (yet) to make this practical that's a good reason, too, but that's not what I heard. I heard "it's hard'. Well, yeah, that's why we have to pay people to do it, instead of them doing it for free for their own amusement.

It's not generally computer power that's the limiting factor in the data that can be gathered and analyzed (except for very specific financial services stuff). It's MANpower. The NBER and BLS have to go out and physically canvas large areas of the country in order to generate economic data.

If my current regions - let's say "the Great Lakes region" - is forecast to have one sort of economy and another area, say, "New England" is forecast to have a much better outlook regarding, say, job creation, rate of inflation, cost of living, etc. it might well affect whether I decide to stay put where I am or move to New England. If the economy is shit all over the US I'll stay put and hunker down. That's not "household" level, but it can certainly affect decisions made by my household.

They already provide state-level data that's virtually real time. I suppose we could probably try to get data on individual regions in each state (e.g., in California or Texas there are huge differences, depending on where people live), but even then we generally keep county-level income data that's updated annually or even semi-annually.

And yes, there is a "ridiculous amount" of information available, but what makes you think the average citizen is able to shift through it and derive something meaningful from it? Or even determine what on-line information is sound and what is bogus?

Good information tends to come from reliable sources, like government agencies tasked with actually gathering the information. As for making sure that the average citizen is able to sift through it, the average citizen is incapable of using a spreadsheet. It is simply unrealistic to ask economists to dumb down the information that they gather to level where people who are untrained in statistics or even basic math can understand it. Frankly, there are countless threads on this very forum where people don't understand even the summary statistics that are provided--things like inflation, unemployment, GDP and GNP, etc.

If 90% of the wealth is concentrated in the hands of, say, 10% of the people then yes, it DOES matter because that means 90% of the population is left with shit. That's not the society I want to live in, if I have a choice.

Uh huh. You would rather move to another country in which the bottom 90% still don't have shit, but there aren't any rich people? People always describe this issue, and it's really a moot point--the fact of the matter is that you haven't moved somewhere else.

There is emphasizing the positive vs. attempting to discredit anyone who doesn't toe the line. The current crew is the latter, not the former.

Again, every party has done this for as far back in history as I can recall. Remember the whole gold-standard debate? Or FDR blowing off Keynes? Or the battles over the First and Second Banks of the US? Or Jefferson's "yeoman farmer" vs. Hamilton's commercial nation?

[aerius]

And yes, there is a "ridiculous amount" of information available, but what makes you think the average citizen is able to shift through it and derive something meaningful from it? Or even determine what on-line information is sound and what is bogus?

Good information tends to come from reliable sources, like government agencies tasked with actually gathering the information. As for making sure that the average citizen is able to sift through it, the average citizen is incapable of using a spreadsheet. It is simply unrealistic to ask economists to dumb down the information that they gather to level where people who are untrained in statistics or even basic math can understand it. Frankly, there are countless threads on this very forum where people don't understand even the summary statistics that are provided--things like inflation, unemployment, GDP and GNP, etc.

I gotta agree with Ossus on this one, the average person can barely balance a household budget on a good day and can't quite figure out what "19% APR" on a credit card means. Unless you can reduce a bunch of economic stats to colour codes or something like that it's just going to go right over people's heads.

Putting together all the information and making sense of it is truly a pain in the ass, hell, just use the latest GDP report as an example. GDP is up, but then you look at the deflator they're using to adjust the GDP for inflation and it's like "how the hell could it be right?" since the deflator is well under the inflation rate. What now? Then you see the part which says profits of financial companies were up nearly 30% (annualized) when all we've heard this year is the financials taking record losses and writeoffs. What the fuck's going on? Turns out after a bunch of digging around that banks were booking loan losses & write-offs as profits, gotta love that Enron style accounting.

There's no easy way to put this into a nice neat chart or number that Joe Blow can understand, Joe Blow just knows his dollars ain't going as far and that's about as far as you can lead him. Digging through layers of (sometimes contradictory) numbers and trying to make sense of them? Forget it. Gives me headaches, let alone the average person. It's not nearly as bad as doing multivariable calculus or fluid dynamics, but neither is it as simple as "2+2=4".

[Darth Wong]

Ossus is spewing a load of bullshit. The average person can understand figures like "median household income" just as well as they understand GDP. And that's a better indicator of the health of the economy for normal people than GDP growth will ever be. He is simply trying to deceive people into thinking that there is no other convenient single-number metric that could be generated without some kind of enormous work involved. Or how about "median household buying power", thus taking inflation into account? Year by year changes in this figure would correlate far more tightly to the average American's actual economic experience than GDP growth.

Or how about "percentage of unemployed or underemployed Americans", which the Rutgers School of Management and Labor Relations calculated to be at approximately 10%, or 25% higher than it was just one year ago?

Watch the TV and the only economic indicators you hear are the Dow Jones and the GDP. That's the economy for rich people, not the economy for regular people.

[Master of Ossus]

Ossus is spewing a load of bullshit. The average person can understand figures like "median household income" just as well as they understand GDP. And that's a better indicator of the health of the economy for normal people than GDP growth will ever be. He is simply trying to deceive people into thinking that there is no other convenient single-number metric that could be generated without some kind of enormous work involved. Or how about "median household buying power", thus taking inflation into account? Year by year changes in this figure would correlate far more tightly to the average American's actual economic experience than GDP growth.

That makes sense when Broomstick is asking for actual data to be involved at regional levels in real-time. Did you even read the discussion up to this point?

All of those figures are already released (indeed, your "median household buying power" is essentially real income [or real household income] which is updated monthly and regionally), and Broomstick is clearly looking for MORE information than what's already handed out.

Finally, I never claimed that GDP growth was the best metric for a "normal person." It's an important measure of economic activity, but not necessarily the best one for every purpose.

Or how about "percentage of unemployed or underemployed Americans", which the Rutgers School of Management and Labor Relations calculated to be at approximately 10%, or 25% higher than it was just one year ago?

And, again, you're pointing to another statistic that's already released. For those who have been following the discussion, Broomstick is looking for MORE information. Indeed, the article you linked to cites only data released by the BLS as playing an important component in its "scorecard," and the BLS releases its raw data to academics and provides detailed break-downs of all of its data to the general public on its website.

Watch the TV and the only economic indicators you hear are the Dow Jones and the GDP. That's the economy for rich people, not the economy for regular people.

Oh, please. I hear things like inflation, unemployment rate, real income, and interest rates all the fucking time. I guess those are "economy for rich people" figures, too? In fact, the very article you JUST LINKED TO comes from CNN--hardly an obscure news outlet.

But, moreover, people don't even understand GDP figures or the DJIA, because people don't understand how prices are set, don't understand the stock market, and don't understand that the DJIA is a subset of stocks that share a number of characteristics that prevent them from being representative of the entire market.

The average person understands none of these figures, and will have only a vague sense of what any of them mean.

[Darth Wong]

That makes sense when Broomstick is asking for actual data to be involved at regional levels in real-time. Did you even read the discussion up to this point?

Yes, and I noticed the post where you introduced the idea of stats that you have to update in real-time. As I said, you are trying to make it seem more difficult than it is.

All of those figures are already released (indeed, your "median household buying power" is essentially real income [or real household income] which is updated monthly and regionally), and Broomstick is clearly looking for MORE information than what's already handed out.

Except that this figure is given nowhere near the prominence of GDP. Look at the article in the OP. Are you going to continue bullshitting and try to pretend that this is atypical of the way economic news is reported?

Finally, I never claimed that GDP growth was the best metric for a "normal person." It's an important measure of economic activity, but not necessarily the best one for every purpose.

That's why it's so annoying that most economic news treats it as if you can refute accusations of a bad economy by pointing to it.

And, again, you're pointing to another statistic that's already released. For those who have been following the discussion, Broomstick is looking for MORE information. Indeed, the article you linked to cites only data released by the BLS as playing an important component in its "scorecard," and the BLS releases its raw data to academics and provides detailed break-downs of all of its data to the general public on its website.

I never said these statistics were being kept secret, so stop bullshitting. But economic reporting downplays or ignores them in stories like the one in the OP (you know, the one that this whole thread is supposed to be about?).

Oh, please. I hear things like inflation, unemployment rate, real income, and interest rates all the fucking time. I guess those are "economy for rich people" figures, too? In fact, the very article you JUST LINKED TO comes from CNN--hardly an obscure news outlet.

You mean the unemployment rate that was being reported at 5.7%, because they ignore discouraged or underemployed workers? Yes, I did link to a CNN article, which was in turn reporting a finding by Rutgers. That doesn't change the fact that the much lower figure will get vastly more airtime than the more meaningful figure, and we both know it. But please, feel free to continue bullshitting that the public is not being fed a load of horseshit about the economy.

But, moreover, people don't even understand GDP figures or the DJIA, because people don't understand how prices are set, don't understand the stock market, and don't understand that the DJIA is a subset of stocks that share a number of characteristics that prevent them from being representative of the entire market.

The average person understands none of these figures, and will have only a vague sense of what any of them mean.

That's why they get all of the headlines. People don't understand how poorly they correlate to individual household economics, and they assume that the economists must know what they're doing so these figures must mean something important.

[Master of Ossus]

Yes, and I noticed the post where you introduced the idea of stats that you have to update in real-time. As I said, you are trying to make it seem more difficult than it is.

Broomstick's examples of what data she would find useful almost invariably require real-time or near-real-time updating. Moreover, if that is not a requirement, then economists already provide vastly more data even than the BLS stuff which has largely been discussed, here.

Except that this figure is given nowhere near the prominence of GDP. Look at the article in the OP. Are you going to continue bullshitting and try to pretend that this is atypical of the way economic news is reported?

Again, just because the media gets it wrong is not indicative of some failure on the part of economists. I've pointed out, repeatedly, in this thread that economists already DO provide vast amounts of data that is useful to "normal people."

That's why it's so annoying that most economic news treats it as if you can refute accusations of a bad economy by pointing to it.

I'm sorry. I had assumed that this thread was discussing economics and not the media.

I never said these statistics were being kept secret, so stop bullshitting. But economic reporting downplays or ignores them in stories like the one in the OP (you know, the one that this whole thread is supposed to be about?).

So what's your point? That CNN picks the wrong statistics to present? Moreover, I've been responding to Broomstick's statement that she wants more useful data the whole time, notrespecting the fact that virtually all of the data that's being requested is already tracked and released to the general public.

You mean the unemployment rate that was being reported at 5.7%, because they ignore discouraged or underemployed workers? Yes, I did link to a CNN article, which was in turn reporting a finding by Rutgers. That doesn't change the fact that the much lower figure will get vastly more airtime than the more meaningful figure, and we both know it. But please, feel free to continue bullshitting that the public is not being fed a load of horseshit about the economy.

It's not "horseshit" to be given accurate information. The public is just too stupid to understand economic measures, and so they consistently demand ones that you wouldn't have picked from media outlets. If you actually go through a BLS report, they don't emphasize GDP growth, particularly--that's just what the public demands that CNN talk about.

That's why they get all of the headlines. People don't understand how poorly they correlate to individual household economics, and they assume that the economists must know what they're doing so these figures must mean something important.

Those things get airtime because people are used to hearing about them and because they were very early measures of the economy. Again, blame CNN for the poor coverage that other figures get, but blame the public for being unable to just go through the BLS statistics and pull out the most useful information from those. There's no way the public would understand it, even if they were given the sort of information that you think is more important for them.

[J]

I'm rather more optimistic than my husband, I don't think the average person is quite as braindead as he feels they are and I believe they can learn the basics needed to make sense of all those (conflicting) economic indicators.

For instance, the BLS provides a table of Alternate Measures of Unemployment with each of the unemployment reports it releases, U-3 is the headline jobless number fed to all media outlets for general consumption. U-6 could be seen as the "real" jobless number, and I don't think it would be too hard to show the average person that this may indeed be a more valid measure, the BLS even provides nice descriptions so it shouldn't be hard to explain it to Joe Smith. Average Joe's can understand phrases such as "people who've given up looking for work" and "people who want to work but can't find jobs", this isn't too hard for folks to understand.

Same thing with median income & purchasing power, we look up the raw income numbers and the consumer price index, then subtract the CPI from the income and see if it's higher or lower than the year before. If it's higher the person's better off this year, if lower then he's poorer, this isn't all that hard to figure out or explain to Joe Average.

The above will give the average person most of what he needs to know; is it easier or harder to get a job, and is his wage & cost of living going up or down. It can then be broken down into sectors & areas if needed and that's not all that hard either. For instance Joe can look at the figures and note for example that jobs in his field are going downhill where he lives but in great demand a couple states away with higher pay. He may then decide to make the move for greener pastures.


It's only when we come to measures such as GDP figures that things become confusing and stupid. I mentioned in an earlier post the GDP deflator used to adjust the GDP for inflation. Supposedly, the deflator uses a rapidly changing basket of goods to more accurately reflect consumer purchase patterns as opposed to the CPI which uses a fixed basket of goods. This is why the deflator can go all over the place though it generally corresponds with the core inflation number. Right now it's sitting at under 1.5% which is the only reason the GDP went up, I've yet to hear an explanation for why a number as low as that is plausible. Trying to make sense of this and explaining it to the average person will probably result in glazed eyes.

[Master of Ossus]

[snip]U-6 could be seen as the "real" jobless number, and I don't think it would be too hard to show the average person that this may indeed be a more valid measure, the BLS even provides nice descriptions so it shouldn't be hard to explain it to Joe Smith. Average Joe's can understand phrases such as "people who've given up looking for work" and "people who want to work but can't find jobs", this isn't too hard for folks to understand.

IMO, it's not a question just of the public's inability to understand, but their unwillingness to put forth even the effort to have it explained to them. Definitions of things like inflation, GDP, unemployment, real income, etc. are easy enough to explain but people get them wrong all the time. If you tried to explain something like this to some random guy on the street, you wouldn't get past the statement that there are different ways to measure unemployment before he stopped caring about what you were saying.

Same thing with median income & purchasing power, we look up the raw income numbers and the consumer price index, then subtract the CPI from the income and see if it's higher or lower than the year before. If it's higher the person's better off this year, if lower then he's poorer, this isn't all that hard to figure out or explain to Joe Average.

It's not a subtraction thing--CPI comparisons always involve multiplication. Again, good luck explaining this to some idiot on the streets.

The above will give the average person most of what he needs to know; is it easier or harder to get a job, and is his wage & cost of living going up or down. It can then be broken down into sectors & areas if needed and that's not all that hard either. For instance Joe can look at the figures and note for example that jobs in his field are going downhill where he lives but in great demand a couple states away with higher pay. He may then decide to make the move for greener pastures.

I highly doubt that he's going to care about the measure, let alone bother to look it up or even understand it. I appreciate your optimism, but I really don't think it's realistic.

It's only when we come to measures such as GDP figures that things become confusing and stupid. [snip]Trying to make sense of this and explaining it to the average person will probably result in glazed eyes.

Again, I think you seriously misjudge where people stop paying attention or caring. Remember that many of these people don't even bother with statistics at all, because their personal experience is a better indicator for them of how things are going. Moreover, if you can't explain market goods to Joe, how is Joe going to understand real income adjustments (you can't explain the CPI to him without market baskets). And I agree with you--there's NO WAY you're going to be able to explain a market basket to some guy off the streets. So, essentially, he's not going to understand inflation or any real measure of income or value.