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Economics

Betting it all on “the economy?”

November 28, 2015 by Michael Neely

“The Economy” Won’t Save You

First, it is because it’s not about “the economy,” it’s about “your economy.” If you are waiting for something to pick you up and whisk you away to your dream life, you will be waiting a long time. Taking personal responsibility for how your life and your finances turn out is the only way that you will come close to living the life you want. As Seth Godin put it  “Instead of wondering when your next vacation is, maybe you should set up a life you don’t need to escape from.”

What If “The Economy” Isn’t As Strong As You Think It Is?

Have you heard the news about the economy? According to the mainstream media, total economic activity is going off the rails and demand is so high that the Fed may raise interest rates in December. So, retail is raging, home sales are off the charts, and auto sales are going through the roof. Here’s the problem. They aren’t. This thing that you could be relying on to make your financial dreams come true that the media calls “the economy” is limping along to the same pace it has for over eight years now.

[Read more…] about Betting it all on “the economy?”

Filed Under: Business, Economics Tagged With: Economics, Federal Reserve System, Wall Street

Spinning Economic Numbers

August 16, 2011 by Michael Neely

It’s August 16, 2011 and one of my favorite economic indicators is being released today. The figure is called capacity utilization and is the percentage of industry that is being utilized vs. sitting idle waiting on workers, capital, orders, repair, etc. If you ask me, it is a great indicator of where the economy is truly headed. It is also one of the more esoteric indicators, so I have to look for it. I also have an uncanny nose for bullshit. Let me explain.

I was thankfully forced to read a book called 1984 by George Orwell in high school in 1983. This was an era before cell phones, personal computers, GPS or any of the other niceties that we enjoy/tolerate today. I thought it impossible that there would be an illuminated box that would sit on a table and spy on my every move, reporting to the central government nicknamed “Big Brother.” The news agencies were all state run (in the book) and the people saw the news that the government wanted them to see, which usualy had something to do with the geo-political sentiments for that time. At least that is the way it was in the book, right? Team that up with my service in the US Atlantic Submarine Fleet in the late 80’s and I have an almost immediate distrust for what people call “the news.”

When I was a broker (by NASD license alone), I read the Investor’s Business Daily and watched CNBC for economic news. These were two places that the news was almost all eceonomic. In many cases, if you didn’t have a background in economics (or at least know a little something about it), the news from these sources would not make any sense to you.

I now rely on CNBC.com and in all fairness to one of my favorite channels, I haven’t had the luxury of watching CNBC in a few years now. I would hope that their televised reporting has less to do with politics and more to do with economics.

As I am looking for my favorite indicator, here is what I see on the CNBC.com homepage and why it stands out to me:

“US Housing Starts Fall Less Than Expected in July”- In a perfect world, this is not-so-good economic news. Here they are trying to make it sound completely peachy. The news is not-so-good.

“Is Texas Job Boom Gov. Perry’s Doing- Or Just Luck”- As a trader, broker, investor or someone else involved int he economic machinery of today, why do I care about this obvious political jab from a formerly conservative news source?

“Stocks Fall Amid Global Economic Fears”- What about domestic economic fears? We have high unemployment, no growth and stifling government intervention in small business. By the way, less than 1.4% growth in GDP for two straight quarters is, for all practical purposes, no growth. Also, it is an economic fact, not an opinion, that small business creates the jobs, not government. We don’t have any fears here? Try again!

Today, I had to sift through some BS and eventually go to another site to get the number I wanted. The answer is 77.5%, up from 76.7%. This is better economic news, all things considered. It does indicate that a surge in industrial production took place in July. It is better news, but not the indication that we are heading for an optimal 3.5% growth in GDP anytime soon.

Watch the “news” with care. There’s a LOT of bullshit out there.

Filed Under: Business Tagged With: 1984 by George Orwell, CNBC news, Economics

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