Watch the Data You Read

From the Big Picture:

Barron’s Alan Abelson discusses the lack of media skepticism when reporting most economic data these days.


“Take the big play given to the 3.6% rise in sales of existing homes last month, which helped power a nearly 200-point rally in the Dow that lifted that venerable index over 9000 for the first time since January. Adding to the excited stock market response was the refrain in virtually every story, whether recounted in print or on the Internet and the tube, that this was the third month in a row of higher sales, signaling that the long-awaited but frustratingly elusive bottom in housing had been reached. Really?

As Mark Hanson of the eponymous real-estate advisory points out, it’s a seasonal phenomenon that until recent years has happened every year.

Indeed, the wonder of it is that, with prices soft and mortgage rates down, sentiment better and supply restrained by foreclosure moratoriums, sales weren’t higher than a year ago. Some of those benign factors are changing, and not for the better: Rates are creeping up, moratoriums are ending and foreclosures are on the rise.

Prices, moreover, are also rising, Mark points out, “but only at the low end, as investors and first-time home owners slug it out for $150,000 foreclosure sales.”

Prices at the middle and high end are a whole different and not very happy story. And Mark notes ominously, “rising foreclosures as the market enters the slow season is a negative housing leading indicator that wasn’t in place in July 2008, but was in place in July 2007,” when the roof started to fall in.

Although it may sometimes seem as if we do, it isn’t that we believe every hopeful bit of news should be dumped on. But an account tempered by a little perspective might give investors and everyone else a truer picture of the way things are rather than the way we wish they were.”


13 Responses to “Watch the Data You Read”

  1. 1 Wen-Li Chan July 25, 2009 at 5:58 PM

    I think there’s nothing wrong with good news being “dumped on.” We do need to be cheered up during this down time. There’s not much each individual can do to influence the whole situation but wait for it to turn back on its own. When I see those “good news” on TV, there is a part of me wondering if it is the end of this recession but knowing that just a few small cases doesn’t reflect the whole situation. I believe that by taking this class, we know how the economy works in this country and in our lives. The good news is not “dumped on” us.

  2. 2 Jessica Tsai July 26, 2009 at 8:10 PM

    There may be some optimism amidst the recession, but it is not unwelcome. I personally feel that after constantly reading about the negative effects of the economy, having a change or variety in perspective is necessary to keep the public from becoming hopeless. While I also believe that we cannot pretend that change is not necessary in order to turn the state of the economy around, it definitely helps to have the encouraging perspective that things will start getting better soon. It goes without saying that any changes will require time before they affect the economy in a larger or macro level and I personally believe that any good news is not taken for granted in recent times and may be just what we need to press on in these tough times.

  3. 3 Kendall July 26, 2009 at 10:17 PM

    These days I hear most co-workers say they hate to watch the news or read the newspapers because there is nothing but bad news, but then they will also turn around and say that anyone with some good news is a charlatan. So I’m not sure if they are waiting for constant positive reinforcement from all sectors. Personally ‘true’ good news is always welcome. Though I do agree that we have to watch from where the good news is coming from.
    I think that Americans are not a patient group either and something that lasts more than six months with no results is beyond most of our capacity. We know that stress takes its’ toll on the body and it would be interesting to see if people as a whole have been more afflicted this year from stress and just basic grumpiness. Some human resources departments now have incentives for their employees to exercise more so they will feel more active and happy.
    Like all else from the media we should take it with a grain of salt.

  4. 4 Jessie Maguire July 27, 2009 at 9:50 AM

    For a while American’s have read nothing but depressing news regarding the economy and the housing market, especially here in California. It is a little surprising that there is some good news with regards to the housing market, but I think it is about time. It is true that the source of the information is key in deteriming whether or not the numbers are accurate, but that is true for all things. Now that people are more educated on what can happen if you are careless about money hopefully they will be more likely to do the right thing when it comes to purchasing houses. Foreclosures are never going to be completely gotten rid of, but people can do their best to avoid them by being smart with their money.

  5. 5 Sanamjit Bains July 28, 2009 at 11:04 PM

    Its nice one in a while to be “bumped on” with good news when there so much negative news about the economy. Even though these are small figures and cases, its relevant enough to give some hope for improvement.

  6. 6 Lauren Swartz July 29, 2009 at 10:55 AM

    The recovery of our nation’s economy is dependant on consumer and investor confidence. Painting a rosy picture in news stories is a technique to increase those confidence levels. Realism is important, but without the neccessary optimism the market will never recover.

  7. 7 Jennifer Wienecke-Friedman July 31, 2009 at 1:12 PM

    Right Lauren, consumers won’t spend money unless they are confident they have confidence. If the higher income areas (those with larger houses) are not flowing financialliy then their marginal propesstiy to consume will be lessened, as well.
    My sales last night were very disturbing, as were the sales of other vendors at the market.

  8. 8 Caroline Rice July 31, 2009 at 4:11 PM

    I concur with Jennifer and Lauren’s comments. We need to have some optimistic news. It is important to be aware of where you are investing and how to spend your money, especially in these financially turbulent times. However, it is equally important to keep money flowing into our economy with spending. If just a fraction of the people who see a bit of good news reported choose to spend a little more than their current norm, it helps to pull us up further and maybe they will start a positive, upward spiral.

  9. 9 Thomas Babcock, Japan August 1, 2009 at 2:44 PM

    To Wen-Li Chan

    Any news being dumped is call prapoganda. New should be just facts not feeling like history just the facts.

    To Jennifer Wienecke-Friedman
    Spending your money is based on decision which you make based on the information you have. Now if I lie to you and say you have no coffee you should go out and buy some and you do. This is call manipulation and if you like being manipulated then go ahead spend you money how other people think you should. Drink the cool aid.

  10. 10 Abby August 2, 2009 at 10:51 AM

    The media has played, and probably always will play, an integral part in shaping the country’s attitude towards any event, particularly one that many people do not fully understand, such as our current recession. When the greater public does not understand the intricacies of our plummeting economy, they are more apt to adopt the sentiments of the newspaper or TV before them. And depending on the viewpoint of each particular media outlet, Americans adopt very different viewpoints of their own.

    Just as we can tell from the comments on this story, some want to be fed good news, while others want the hard facts. As politically skewed as many media outlets may be, that is also the beauty of free speech: we can choose whether we want to hear liberal or conservative commentary on the economy, or maybe a more neutral stance. It may be “nice” to hear good news sometimes, but it may also be misleading; the ability to dissect economic information and make our own conclusions is essentially the mot valuable opinion.

  11. 11 Joseph Garcia August 3, 2009 at 11:53 PM

    Just when I was getting my hopes up, but still I need to remember that the media may be trying to instill more confidence in us. I can’t blame them because more consumer confidence would certainly help attract business.

    To Thomas and Abby,
    I think the media plays a strong hand that affects the public’s mind. They won’t give us just the “hard facts” though because they just want us to watch their show, boost their ratings, and in turn, they’ll make more money. When Michael Jackson died, I couldn’t see a single magazine cover that didn’t have his name on it because his death would cause us to buy their magazine if they talked about him. In the end, they just want our money, so with the economics education we’ve received, it’s up to us to educate ourselves and those around us with what we believe is right.

  12. 12 Alejandro Cortez August 4, 2009 at 1:25 AM

    The important lesson to take away is that the informed citizen, regardless of their political affiliations, has to treat data with a certain degree of skepticism. I am not proposing that we distrust every bit of information we receive, but a healthy distrust in numbers that are thrown around by media outlets is practical. Yes it is nice to hear good news, especially in this economic milieu, but it is quite another matter to blindly give ourselves over simply because it makes us feel better.

  13. 13 Maricar De Los Reyes August 6, 2009 at 3:42 PM

    Some good news is better than none at all! Any sign of some improvement is better than none. At least with some good news, it might encourage people to follow suit of what those people did. More consumer spending is what we need to boost our economy back up!

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