EconMatters: We have noticed that despite an improvement in the economic fundamentals of the United States as per the robust manufacturing numbers, automobile sales data, and upbeat employment numbers in 2014 many go out of their way to find negatives in every economic report instead of focusing on the relativeness of the data. In other words, are we doing better in these areas than two years ago on an “apples to apples comparison” basis?
‘Relative Improvement’ versus ‘Relative Perfection’
Sure there are things in most economic reports that could be better in an ideal world, and this world is far from ideal, and is coming back from a tough period after a structurally significant deleveraging process due to the cyclical natures of economies and business.
But to just pick apart negative aspects of a good econ report because growth isn`t as fast as it could be, or employment isn`t perfect compared to the 1950`s boom is shortsighted and misses the real point of these reports, which is to show the trend in relation to the past six years. The relative improvement in the data over an annual basis compared to the previous three years, two years, and a year ago levels. Is the trend still in place, what is this trend, has a new trend emerged? This is what we are looking for in the data comparisons, and not whether the econ reports are ‘perfect’!
For instance take the employment reports, we just had the fourth straight 200k plus Employment Report, a trend we haven`t had since the year 2000, yes 14 years, and in even good and bad economic cycles, and people could point to the level of participation as their sole focus if so inclined.
I think there are many structural issues behind the participation rate that are much more complex than the simplistic view that there are simply not enough good paying jobs so these workers have given up hope. But regardless, first we have to employ the individuals who are in the job market, and we are doing a pretty damn good job of that right now “relatively speaking” to two years ago when 80k was the norm, remember it is all about ‘relative improvement’, and not ‘relative perfection’ in the data.