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Robert Winner


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Economy indicators

The value of my home went down. The tax on my home went up. The price of homes in the USA went up 12.1 percent last month according to the Standard & Poor’s/Case-Shiller 20-city home price index.the most since 2000.

What indications can be taken from this. Is it a good time to buy, sell, rent, or what? Since building permits did not go up ... is this really a sign of recovery or just a shortage of houses on the market causing the prices to rise?

Is this a good economic indicator?

I honestly do not know the answers.


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    Jun 27 2013: Human knowledge on how the economy works is limited
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      Jun 28 2013: I think your right. There are to many factors and some in use give false indications. As was mentioned earlier we will see a growth in employment ... however, that will be false as the work hours are being reset to 25 hours per week in the USA. So many will have two or even three jobs at minimum wages. Even the unemploymebnt figures are unreliable. The National debit clock shows two unemployment rates .... one official and one actual ... one indicates about 8.3% and one shows about 17% plus.

      There appears to be optional rules for calculating and reporting almost everything. I think that is why spin doctors make so much money.

      I once worked in analysis .... I could make the same numbers prove or disprove anything my boss wanted me to show.

      If we saw the real numbers .... all of the people who have had their hours reduced to 25 a week ..... how would they be represented. Is "employed" a forty hour week ... Obama care defines "30 hours a week" as a full time employee for insurance purposes. Are 25 hour employees considered "employed" or unemployed as they would be elgiable for welfare.

      I once sponsored a conversation that the rules for calculating all of these indicators should be standardized so that one number would be presented by all parties making the public aware of the true picture and taking the politics out for both sides.

      Perhaps we have the knowledge .. the truth can damage or help .. the question is ... what is the truth?

      Thank you for your reply. Bob.
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        Jun 28 2013: You are right - A single rule for calculating indicators will reduce the misuse of numbers by politicians. But on the actual point, I think there is a profound problem with what is not knowable about the economy due to changes that are not measurable in mathematical or number terms. Perhaps let me provide a little example with inflation.

        We use Consumer Price Index (CPI) to measures the rate of inflation by looking at change in the price of a fixed market basket of goods and services. The problem is that price changes can be confusing- either an increase in real price or a decrease in quality can be scientifically regarded as price increase. Consider this; I own a bakery and the cost price of a bread loaf is about three dollars and selling price is somewhere around five dollars. When inflation hit (i.e cost of producing my bread goes up) i have the choice of increasing the price or slightly reducing the quality (i.e. the quantity of flour, sugar or other ingredient that goes into the bread, Or perhaps sack the security, decrease salaries or slightly increase working hours). The price of my bread may stay the same with a slight reduction of quantity – there is no way to represent that in the official inflation number.

        Qualitative difference cannot be measured or represented in numbers – this, in my opinion, is the biggest problem in the science of economies as far as indicators are concern.

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