Government Data Is Garbage: Elon Should Focus on Fixing That Next
10th February 2025
If you thought that we were going to start with jobs data, you are mistaken. Today, “inflation expectations” deserve some attention. Right around 10am ET Friday, the stock market started to decline. Until that moment, it had done fairly well even as yields increased on the back of the jobs report. Then out came the University of Michigan CONsumer CONfidence data, showing 1-year inflation expectations jumping from 3.3% to 4.3%! This was lucky for us, as we had pointed out in our NFP Instant Reaction – What to Do With Data You Don’t Trust that we were moderately bearish risk assets. Consumer inflation expectations were not on my bingo card of what could turn stocks, so I guess that we can classify that under “better lucky than smart.” We should just run with it, but we cannot help ourselves.
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In physics, what we consider rules are termed laws. But for most people, rules are a set of “things” that need to be followed. Whether they are laws or axioms, they are things that are clear and explicitly define and control actions. On the other hand, conjectures, educated guesses, and “rules of thumb” are general guidelines that often work or point you in the right direction. But by no means are they immutable rules that must be followed.
So why do economists insist on terming certain things rules that are really conjectures? Probably because it sounds better, especially if you want people to believe that they work. Or maybe it just makes it easier to win prestigious economic awards?
But we revisit this subject today, not to focus on how inaccurate it is to call many of these things rules, but to highlight that the so-called rules definitively don’t work when they are based on inaccurate data!