Are You Being Served?

This morning’s services ISM report was strong, very strong, in fact the highest since February 2011. Unfortunately after most of the revisions are in, we discover that 2011 first quarter now shows negative GDP growth. So don’t get carried away believing that this means anything for the economy. Not that bots have beliefs, they just pump.

The problem here is that most of the “data” that we receive as gospel is, in fact, just an estimate based largely on extrapolation because the data collection process is so slow. The Fed claims it makes decisions based on the incoming data – and it probably does – but the problem is that the incoming data is often seriously wrong, but this isn’t discovered for a year or two. How does any sensible person believe that he or she can make real-time control decisions over the economy when there is so much lag in the feedback? Obviously the class of “sensible persons” only includes a very few members of the class “economists.”

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