Over the weekend, NDD posted an article titled, The Doomers Tell a Compelling Story... Until You Look At Their Record. He noted that despite continued prophecy of the end of times, their predictions have come up short on a regular basis for the last two years. This highlights one of the really annoying aspects of talking about the economy: it's a moving target and you have to let the numbers tell you where things are headed rather than thinking things are moving in X direction and finding data to support your claim.
Starting a little over two years ago, the economy started to grow as evidenced by the GDP report along with the regional manufacturing numbers. The doomers continued to talk of the coming end of the world. However, their prognostications became less frequent as the data emerged. They would triumphantly return when data turned bad, but would otherwise be silent. Now, however, that the economy is weakening, they have returned in force. But as NDD pointed out yesterday, they are essentially making the same arguments this year that they made last year, taking away from the potency of their argument.
But the doomers are not the only ones guilty of this type of short-sightedness. The perma-bulls were just as guilty as the economy slid into recession. At that time, talk of a recession indicated we were in a "mental recession," rather than a real recession. The constant drops in the market were in fact buying opportunities. The bursting of the housing housing bubble would have a limited impact and the damage from the financial fall-out would be contained. You get the idea.
The point of the previous two paragraphs is simple: the economy is a moving target. While there are many people who made their reputations by being negative, they have not changed their analysis as the economy rebounded. Hence, for the last two years, they have essentially become the children crying wolf, without realizing the continued prognostications for eminent demise make them look more and more out of touch. And indeed -- their argument started with, "it's only one number," to advance to massive conspiracy theories that the entire economic complex is a group of individual agencies who rig numbers at the behest of their corporate masters. And the perma-bulls who continually said "buy" looked incredibly stupid as the market dropped like a stone, continually telling the American public that stocks would never be this cheap again (only to buy see them drop another 200 points the next trading session). In short, anyone who continually has one opinion about the economy (bullish or bearish) is always going to miss half the story. More importantly, they're going to try and impose their version of reality over existing data, making their analysis laughable.
Let me put this another way: anyone who was a perma bull or perma bear for the last four years was wrong 50% of the time. Is that the person who you want to listen to on a regular basis?
Noted for May 23, 2013
13 minutes ago