The U.S. economy is facing mixed signals as it enters an election year. On one hand, the official third-quarter gross domestic product (GDP) numbers show a strong annualized growth rate of 5.2%. However, anecdotal evidence compiled by the Federal Reserve in its quarterly Beige Book suggests a slowdown towards recession. This conflicting data creates uncertainty and makes it difficult for policymakers and investors to make informed decisions [90b26d13].
In addition to the conflicting signals in the economy, there are concerns about the quality of the data used for economic forecasts and election polls. A recent article from Yahoo Finance highlights the mixed signals in earnings reports from companies like General Motors (GM), UPS, and Whirlpool. UPS reported disappointing results, citing package demand, labor costs, and job cuts, while GM beat expectations and expressed optimism about the US economy, job market, and auto sales. Whirlpool talked about weakening spending, while Visa described a resilient consumer. The article also mentions that the AI sector is seen as existing on a separate track from economic fundamentals. These contrasting reports from companies and economic data make it difficult to determine the state of the economy and consumer confidence. The declining quality of information and data used for economic forecasts and election polls further adds to the uncertainty [e5d525e4] [90b26d13].
The challenges posed by mixed signals in the U.S. economy and the declining quality of data used for economic forecasts and election polls create a sense of uncertainty and make it difficult for policymakers and investors to make informed decisions. As the country heads into an election year, these factors become even more significant. It is crucial for policymakers and investors to carefully analyze the available data and consider the limitations of economic models in order to navigate the uncertain economic landscape [90b26d13] [e5d525e4].
The quality of soft data in surveys and polls about the US economy is deteriorating, leading to a distorted view of the economy. Hard data shows a strong recovery, with GDP growth, consumer spending, and the job market performing well. However, soft data, such as surveys and polls, indicate massive economic pessimism among households. The divergence between hard and soft data can be attributed to the underweighting of the experiences of certain groups, particularly lower-income and frontline workers. The decline in survey response rates and the skewing of respondents towards higher-income individuals contribute to the distorted view. This skewed perception of the economy can lead policymakers to make incorrect decisions and potentially exacerbate income inequality. To avoid this, there is a need to change how the US economy is measured and discussed [5d3f981a] [e5d525e4].
Compustat data, often used to measure corporate market power and market competition, has been criticized for its limitations. An analysis by Trelysa Long on itif.org argues that Compustat data is a poor representation of concentration and economic competition in the United States. Long suggests that policymakers should use data from the U.S. Census Bureau's Economic Census instead. Compustat data is limited and lagging, released only twice per decade. It only includes public firms, likely miscategorizes firms, and measures worldwide sales instead of domestic sales. Furthermore, Compustat data fails to accurately replicate concentration measures using official Economic Census data. Long emphasizes the importance of using the U.S. Economic Census data to assess corporate market power and competition accurately [46c26304].
The concerns about the quality and legitimacy of data extend to the U.S. Census Bureau, which has confirmed the legitimacy of text messages asking for help in understanding challenges in the current economy. The messages provide a link to complete the Household Pulse Survey online, which measures the social and economic impacts of the COVID-19 pandemic. The Census Bureau has taken steps to ensure the security of the survey and has not received any reports of scammers trying to emulate the survey texts. It is important for respondents to be aware of the legitimacy of these texts and to participate in the survey to provide valuable data for government agencies to inform the provision of services to Americans [90b26d13] [e5d525e4] [40e7abbf].
In summary, the challenges posed by mixed signals in the U.S. economy, the declining quality of data used for economic forecasts and election polls, and the limitations of Compustat data for assessing corporate market power and competition create a sense of uncertainty. Policymakers and investors must carefully analyze available data, consider the limitations of economic models, and prioritize the use of accurate and comprehensive data sources such as the U.S. Economic Census to make informed decisions. Additionally, respondents should be aware of the legitimacy of texts from the U.S. Census Bureau and participate in surveys to provide valuable data for government agencies [90b26d13] [e5d525e4] [46c26304] [40e7abbf].