The media loves to talk about an economy that races ahead and
then slumps, like some poor Olympic competitor. But the reality is that
the world is a little more stable and flexible than the media would have
you believe. When something goes amiss, consumers react and adjust. Gas
prices go up, we buy smaller cars. Jobs get scarce, we go back to
school. We adapt, but sometimes not fast enough for the short-term
economic indicators.
It is really easy to fall into the trap of looking at monthly and
quarterly numbers and annualizing them--and seasonal adjustment factors
that have run amok aren't helping any, either. The economy is flowing at a steadier rate than many give it credit for.
Source:
Robert Johnson, CFA, Morningstar
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