Man Without Qualities

Monday, August 19, 2002

New News Is No News

Today the media, including Associated Press reports, say that "A key gauge of U.S. economic activity fell in July, a further sign of a shaky economic recovery as stock market gyrations affected consumer and business spending."

But the stock market was well up, especially the retail sector. How can this be?

Does it matter that the Conference Board, which issues the Leading Economic Indicators, seems sure that there will be no "double dip" recession and itself pointed out that "This month’s decline in the leading index was primarily caused by weak equity markets and lower consumer expectations."

That equity markets declined in July was already known and the fall in "consumer confidence" (a variable that may not even exist) was also already old news. All of which means that today's "news" about the Leading Economic Indicators was hardly news at all. The only hint of this in the media reports is the observation that "Leading Economic Indicators fell 0.4 percent ... . Analysts had expected a July decline of 0.5 percent." Which means that today's real news - that is, the new information relative to what was expected - was good news. But you wouldn't know that from the headlines or overall tone of the articles. No wonder the markets went up - although that increase is certainly not all attributable to the Conference Board.

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