Summary
A good economy should be described in terms of sustainability To make a point in economics, one needs measurements
Analysis
Bad News – Good News - Dunno.
“Economy’s Weak Signals Persist”, Wall Street Journal October 26th, fits the boiler plate approach of many business articles, about which the forming of an informed opinion is not possible. The formula is to first list a few points that favor an argument, followed by a few arguments that do not, and then throw in a few unknowns interspersed with sprinkles of quotes from experts, clients or relatives.
In this Wall Street Journal piece the reader is informed that a) sales of newly built homes over the summer was weaker than expected, b) September manufacturing was subdued c) that inventories are mounting, d) that the job market is displaying worrying signs. These could indeed be very bad signs if only one had measurements for such platitudes. If housing was weaker than expected, then by how much and how are they different from whose expectation? Similarly, what is “subdued” manufacturing?
And now to the good news: e) the economy is expanding at 3%, f) investments are growing and g) new homes sales are up. Apparently, homes sales data can be simultaneously good and bad, as they could be weaker than forecasted,(bad) but stronger than last year,(good); no contradiction here if one reads between the lines. Then the reader learns that “skeptics aren’t convinced” that the worst is over. So before we dare feel good again, one should wait until the skeptics are indeed convinced, which may be never by definition. Finally, there are some unknowable items, such as unemployment and Christmas shopping profits that are neither here nor there. The final feel-good item is that manufacturing “has not yet succumbed to weakness”. The implication is that manufacturing will eventually succumb, and if we wait long enough, given business cycles, it may indeed be so.
To write such articles better, there should be a stated reference point as to what the author feels a good economy is and what accepted measurements are. Rather than writing in terms of boom or bust and throwing the reader into euphoria or depression, The Wall Street Journal editors may think in terms of sustainability for markets and companies and use accepted measurements. While the Journal has excellent articles and editorials that are very informative, this piece appears to be hastily put together and does not measure up to the Journal’s standard for content.
