There’s been some discussion among members of the MNB community in recent days about how economic news is reported, making a piece in The Washington Post on the subject particularly interesting. The Post notes that there has been a steady drumbeat of bad economic news of late, with constant reminders from the media that the holiday shopping season was likely to be a tough one for retailers.
“Consider this fact,” writes the Post’s Paul Farhi. “Total retail sales in the United States have increased every month, with one exception, for the past 11 years, according to the U.S. Commerce Department's seasonally adjusted data. That's 130 months of rising sales (compared to the same month a year earlier) vs. one month of declining sales (October). I'll give 130-1 odds that December was yet another ‘up’ month.”
The Post continues, “What these stories rarely note is that consumer spending typically is pretty stable, even in a recession. Thanks to population growth and inflation, personal consumption tends to rise even when the economy is just treading water. When a recession hits, it's not because Wal-Mart had a lousy Christmas; it's usually because of a decline in business investment and profits, and a deterioration of the trade balance.
“These reports from shopping's front lines may tell us something about how an individual chain is performing -- Wal-Mart is down, Kmart is up -- but they don't say much of anything about the economy at large, or about consumer behavior.”
“Consider this fact,” writes the Post’s Paul Farhi. “Total retail sales in the United States have increased every month, with one exception, for the past 11 years, according to the U.S. Commerce Department's seasonally adjusted data. That's 130 months of rising sales (compared to the same month a year earlier) vs. one month of declining sales (October). I'll give 130-1 odds that December was yet another ‘up’ month.”
The Post continues, “What these stories rarely note is that consumer spending typically is pretty stable, even in a recession. Thanks to population growth and inflation, personal consumption tends to rise even when the economy is just treading water. When a recession hits, it's not because Wal-Mart had a lousy Christmas; it's usually because of a decline in business investment and profits, and a deterioration of the trade balance.
“These reports from shopping's front lines may tell us something about how an individual chain is performing -- Wal-Mart is down, Kmart is up -- but they don't say much of anything about the economy at large, or about consumer behavior.”
- KC's View:
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Fair enough.
And in the interest of keeping the “good news” coming, there was a report yesterday that companies said they would cut 92,900 positions in December, down 41 percent from 157,508 job cuts that took place in November. On an annual basis, this means there were cumulative cuts of 1.46 million jobs in 2002, down 25 percent from a record 1.96 million in 2001.
So there.
