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The Joy of . . . Economic Measurement?


For many years, I would buy or sell stocks only when the market opened at 9:30 each morning, because that was the only time of day that I could predict the market price, as indicated by the futures market.  The world has changed.  Futures are no longer a reliable indicator of market action.  They flop constantly all night.

A few years ago, I attended a two-day class in Washington on economic measurement.  It was a real “nerd-fest,” mostly with economists from the Bureau of Labor Statistics (BLS).  They were dedicated to the minutia of statistics.  I came away with renewed confidence in our employment statistics.  Employment reports are the most closely watched economic indicators on Wall Street.  The world has changed.  Employment statistics have become too volatile to be meaningful.

Both of these changes reflect the pandemic, when the government stepped into the failing economy.  That is not a criticism of the Fed or even the normally useless Congress.  They did what was necessary and should be applauded.  The money supply has increased at least 30%.  There are over $2 trillion in checking accounts, which is historically high.  There have been no credit defaults.  Volatile young day-traders have flooded into the stock market, investing their stimulus checks.

Unfortunately, the government’s actions, while helpful and necessary, have skewed the economic statistics.  The lack of such meaningful statistics will make it more difficult to extricate the government.  Economic measurement has never been more important.  The “boys of the BLS” will be working long nights.

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