Follow Paul Donovan

Why economists despair

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Economists sometimes despair of media commentary. In the past 24 hours we have had reports of rising oil as a growth signal (when it was mainly demand side stories driving prices). We have had reports of better Chinese exports as a growth signal (when the stronger Euro and seasonal impacts were present).
  • The world economy is fine – but these are not proper signals. The problem is that financial markets are not good at filtering. There is very little distinction is made between information and analysis from a poor quality source and information and analysis from a more reliable source (like an economist).
  • Retail sales are due from the US today – significant data, as the economy rests on the consumer, but price data and the pattern of labour market growth does suggest that current spending patterns may be more skewed towards the services side of the economy rather than retail sales.
  • US producer price inflation gives a better impression of the state of pricing power in the listed US corporate sector than does consumer price inflation, and is due today. Consumer prices, meanwhile, are proffered by the French and Spanish, along with UK credit conditions.