Thursday, June 22, 2006

Economic Indicators

There has been some Market volitility today, because of reportage of some Economic Indicators have shown a downturn, foreshadowing a potential slowing of economic performance. There is senseless positioning in response to these Indicators, and this Author feels compelled to provide some Insight (probably wrong).

1) Economic Indicators are compiled by Economists, who have a vested Interest in the provision of good numbers. Poor performance is universally from the high end (the least impactual set which can be reported), while economic performance of sharp acceleration (of potential high Inflationary factors) are reported from the low end (again the least impactual set which can be reported honestly).

2) Economic Indicators must align (all going the same way) for successive periods (the number of Periods, mainly Months, depends upon the uniform spread of the numbers) for a discernable Trend to develop. It is only when a Trend develops, that Market transaction decisions based upon Economic Indicators are truly valid.

3) Economic Indicators remain basically based upon Business Management decisions in Production, Distribution, and Sales. It is these decisions which determine the numbers which will later set the Economic Indicators. Business Management decisions vary dramatically over the Short-term, necessitating the arrival of Trends before effective judgements can be made.

Economics stands as the study of Long-term economic performance. One should be wary, but not scared, of the Preliminaries of the Game. lgl

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