the only number that concerns me, is either the perceived number that may influence an election or a policy or social morale,
You aren't nearly cynical enough. Each political faction will take the exact same number and use it to influence in opposite directions. Isn't that clear from the way the same statistic is being spun two different ways? If the Republicans were attempting to win the presidency from the Democrats they'd be screaming just as loud as the Democrats are that the unemployment number isn't accurate and the Democrats would be talking about how great it is. It would be funny in the extreme if I wasn't a registered Democrat to listen to a certain Democratic lawmaker dismiss the household survey as nonsense considering it was the Democrats who prompted changing the method for conducting it back in 1994. What bothers me is that most people don't care if it's their party doing the spinning, they are sheep.
and a guesstimate allowing for a reasonable guess regarding individual spending, personal debt increase, debt default etc etc etc
Is there a direct correlation between the unemployment number and these things? Personal debt tends to increase in good times. Bankruptcies tend to peak after a recession is over. Personal spending might be the only one in that group that has a direct relationship but as should be evident in abundance this can be offset by changes in asset wealth.
where cash flow may shrink and no longer support, or increase and thereby support, theories about growth etc
Actually if you look at statistics for default you'll see there is a higher correlation between cash flow and default risk than there is between measures like loan to value or even credit risk. Divorce plays a big part in personal bankruptcy, foreclosure and default but I almost never hear anyone bring that stat up as rising or falling. As I've pointed out numerous times on this thread, debt service as a percentage of disposable income fluctuates within a narrow range.
Just how long does it take for x change to show up as a "real" result.
A long time. Consider that it took 86 years for Soviet style Communism to collapse on itself. Countries can continue down the wrong path for a long time. Mostly what concerns me the most about the direction of the country is the continual socialization of risk. When you socialize risk, you encourage people to act without due regard for risk and this acts not to mitigate or spread out risk but to increase it. Plus, as I said before, all the costs that keep being attached to employment or shunted to corporations come out in the cost of goods and services, they have to and this is the root of inflationary pressures. If the price of everything rises then I demand a raise, to give me a raise the company has to raise it's prices, get more efficient or go out of business.
In a world economy where you can't raise the price of goods and services because you are competing against countries without this constant socialization of costs the result is whole industries dying or moving off shore. Got steel? The good news is that periodically industries, governments and people go through crisis. The result is fear for their jobs and these forces get rolled back against all the protests.
btw... I disagree that two or more people need to agree on the definition of a number....
Well we don't have to agree, but if you want to have an intelligent debate about oranges with me, it would be best if you didn't have a picture of an apple in your head.
the only number that is important is the right one, leading to a right investment strategy, for a right profitable outcome. that's the true test of the goodness of a number in this case IMO.
The employment number is almost totally useless for investment purposes. And, it's misleading and actually dangerous in the hands of policy makers because they tend to look at it as a goal or at least as evidence that they're doing the right thing.
Remember back when they had this thing called the Phillips Curve? It lead to legislation like Humphrey Hawkins. Remember the government sponsored Title I jobs? (I know I'm dating myself-you can look it up on Google) They were Government sponsored make work jobs for the unemployed. I remember them well because I applied for one of those jobs. (took me fifteen minutes to realize I wanted noting to do with the program) I graduated college in 1978 and as my husband states rather eloquently, you couldn't buy a job back in the late 1970s. But they had this total fixation on watching the unemployment rate, that there was some relation between it and inflation which was completely out of control. So they pass this piece of legislation part of which stated that the Fed's job is no longer just to manage the money supply but to do it in a way that maximizes employment. They are basically saying that prosperity is now the job of the Fed, that monetary policy should be used along side of fiscal policy to insure that everyone has a job. In the same bill, the part that still is in force (the bill expired this year I believe), Fed chairmen had to report to Congress at regular interviews and why when AG goes to the hill they call it "Humphrey Hawkins". |
