Archive for the 'Economic indicators' Category

Reinhart and Rogoff story shows how important it is to check your indicators

This month two academic researchers showed that there were errors in the calculations behind the claim by economists Carmen Reinhart and Kenneth Rogoff that the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one [...]

Obama’s chained inaccuracy

(This article by Philip Green and George Gabor first appeared as a special to the Financial Post on August 16 2012). The Obama administration is considering adopting the “chained consumer price index,” as the principal measure of inflation upon which increases in payments to such things as Social Security would be tied. The Chained-CPI is [...]

Dillusions of importance

Economist Fredrich Hayek, in his 1972 Nobel lecture, criticised what he called the “scientistic” approach to economics. His criticism applies today to those who over-emphasize the importance of measurement in management. He said:  Unlike the position that exists in the physical sciences, in economics and other disciplines that deal with essentially complex phenomena, the aspects [...]

Brilliant propaganda, but lousy indicator of rate of growth of US debt.

  There is a little graphic being circulated around the Internet intended to show that President Obama has recklessly doubled the total US debt accumulated since President Washington.                   As a piece of political propaganda it is brilliant. It implies that President Obama’s administration is worse than [...]

A leading indicator of business cycles that have already happened

A “leading indicator” is supposed to forecast, or at least to help the person using it, to make a forecast. The Conference Board recently announced that it was changing its Leading Economic Indicator to address structural changes that have occurred in the US economy in the last few decades.  The new indicator was released on [...]

Are Americans getting wealthier or poorer? It depends on how you measure “wealth.”

The standard measure of wealth is GDP per capita. The chart below shows that Americans have been getting continually wealthier for decades, with a few blips here and there (source of data). The measure of wealth—Gross Domestic Product, is based on the dollar value of economic transactions. Such a measure depends crucially on the definition [...]

misLeading Indicator suggests world exporting to aliens

When I do calculations on a performance indicator, I usually do the calculation more than one way. This gives me a good check on my method, and gives me assurance that the indicator is meaningful if both calculations match. In some cases this task is simplified if there is some constraint that must be met, [...]

The definitions of performance indicators are critical: the case of unemployment.

The US Bureau of Labor statistics calculates inflation several different ways. The mostly widely reported is U-3, and what people generally call the “unemployment rate.” U-6 has a broader definition and includes discouraged workers and those that work part time because they cannot find full time work. In the 1930’s depression many workers were given [...]

Will anybody ever trust inflation measurements?

About 200 years ago Joseph Lowe said that “the interest of government, the greatest of all debtors, [is] to prevent the public from fixing its attention on the gradual depreciation of money.”  It seems like the Argentinian government is doing its best to prove Lowe right. Recent reports (see here and here) suggest the Argentinian [...]