After reading this piece at Yahoo Finance I feel the need to make several observations.
- The DJIA is not the stock market.
- The stock market is not the economy.
- Neither is GDP.
- The labor market is a better indicator of “the economy” than either the stock market or GDP.
- The Bureau of Labor Statistics Employment Situation Report is not a good measure of the labor market. I don’t know what is any more.
What is “the economy”? Globalization make it very difficult to tell.
Well-being, or utility, is supposed to be at the core of modern economic theory but it’s nowhere to be found in any mainstream discussion of the subject. It certainly isn’t in employment figures, because nobody can figure out how to measure it.
Not to be pedantic, but “the economy†is the entire system of goods/services markets, labor markets, and capital markets and their respective players, and how they interact. Most fundamentally these markets are all dealing with scarcity. The linkages and signals between them come through exchange and price, and measures include the usual suspects like unemployment rates, GDP, and it’s subset of national income and distribution thereof, etc. Players include consumers, businesses, capital and labor providers, and their intermediaries like banks or securities exchanges. And of course we introduce the Big Player: government, and now, international entities.
That’s a mouthful, and probably not laid out in some text quite like that, but that’s what it is. And contra Ben, who cites just a very narrow aspect, utility is just an academics way of explaining consumer price posture in goods and services.
I wouldn’t get too balled up in the precision of statistics. This isn’t physics, and further, just wait a day and it will all change. (Thank god we have government bureaucrats measuring things, making superior judgments and pulling all the right levers……Snicker). Stock market indices have faults, employment measures have faults, economic players have information asymmetry and so forth. And remember, we all define things differently – recession is when your neighbor is out of work, depression when you are and all that.
The great error occurs when we assume precision, infallible judgment and good intent, which for some inexplicable reason we impute disproportionately to government, and correspondingly grant it more resources and power. Or when we don’t foster mechanisms to reign in private enterprises. You can’t outsource market disciplines.
BTW – Its becoming increasingly evident that you have a ready made stream of future blogposts available. China’s economy is in deep shit. The ramifications are huge, many of which we can’t predict. They include the possibility of military conflict. While Schumer and Pelosi play small ball posturing over $5B of chickenshit, and the loons squeal to impeach the motherfucker, real events of significance mature.
An Chinese economy built on beggar thy neighbor, massive credit, and intellectual property theft eventually has a finite life. It winds up being a military economy.
That the Chinese economy had issues and by that I mean issues that won’t resolve themselves over the next quarter became apparent when Xi had himself declared president for life.
You didn’t even mention a big part of China’s troubles: the Chinese authorities have been sawing off the limb on which they’re sitting for a generation.
BTW the funniest thing about Nancy Pelosi’s reaction to the kerfuffle over bad language is that “it’s no worse than Trump” is not exactly a ringing endorsement and undermines the Democrats’ message. She has the same problem that Paul Ryan did. She doesn’t want to use the powers at her disposal to discipline her own caucus. I’m guessing she didn’t think she need to start cracking the whip this soon.
“the Chinese authorities have been sawing off the limb on which they’re sitting for a generation.”
I hear you.
“She has the same problem that Paul Ryan did. She doesn’t want to use the powers at her disposal to discipline her own caucus…..etc”
Perhaps. Or she just has no bal……well. See my comments in your later post on “suffered enough.” I apparently am much more sanguine about a bull in the China shop given the manifest failure of the approach taken by a number of previous senior level politicians. After all, we have a mess on our hands 50+ years in the making Trump is a brash guy, with any number of personality and character flaws, but he’s not afraid to lead, break some shit along the way, and take the consequences. That makes him the anti-Washingtonian. So they hate him. The best indicator that things are going well is the more they hate him. I fail to see the abject horror he has visited upon the nation.
“the Chinese authorities have been sawing off the limb on which they’re sitting for a generation.â€
I missed it, do you refer to the one child policy?
“While Schumer and Pelosi play small ball posturing over $5B of chickenshit”
Those two run the government? Let me think, what was the name of that POTUS guy? Seems like he could sign the bill that was passed unanimously by the Senate, if he wasn’t posturing over some $5B of chickenshit.
Steve
Steve
Weak, steve.
But true.