Maven: GDP and Punishment
Marek Fuchs
02/10/07 - 10:15 AM EST
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The Business Press Maven has sold every piece of writing imaginable, thousands of different types of articles on subjects as diverse as business, religion, sports and tug-at-your-heartstrings gems, in addition to a book, a chapter in a book, speeches, TV advertisements and much, much more.
But I have not, alas, made one freakin' thin dime from my voluminous attempts at poetry. The only success I've had in the poetic sector of the writing business amounted a nonprofit transaction, drawing lunch-table laughter during middle school, when I recited a few original off-color limericks. But my hand has been forced here. So I, in turn, am forcing
TheStreet.com to pay me for a (clean) limerick.
At issue, as always, beneath a little goofiness and fun here is the most serious concern for investors. I'm concerned with something that probably misleads them as much about the macro picture of our economy as anything else belched out by the business media, and this particular bugbear is one I have made it my personal life mission to change.
I am talking, of course, about how the Commerce Department's initial gross domestic product numbers are always reported as if they have been handed down from the mount on a tablet and
will not change.
The GDP numbers, as we know, are almost always revised and often by big margins. But that doesn't stop the business media from reporting on the initial numbers without mentioning the good chance of substantive revision.
Instead, they incredibly, imbecilely (Is that even a word?), inarticulately (I'm pretty sure that one is.) draw hard-and-fast solutions about what that original number -- the number that probably means nothing -- says about the economy. Investors have been constantly misled into believing we were on the cusp of recession when economic growth was actually 50% higher than initially reported, or duped into thinking economic performance was better than it was later revised to be.
This is no mark of political bias in the business journalism world; the same thing has happened under Democratic and Republican rule. This is just habitual laziness, being hypnotized by the old, incompetent way you've always done things. Things have gotten slightly better lately, with a few mentions of the original number's short shelf life appearing in initial reports, for which I take total credit. But you can't teach old dogs new tricks.
When fourth-quarter GDP was reported a couple of weeks ago, many business journalists took that impermanent 3.5% growth number and ran with all manner of conclusions, forcing false notions down the gullet of unsuspecting investors.
Well, after warning upon warning about doing that, this report is the last straw. As I've warned I would in defense of investors everywhere, I finally have penned a limerick making fun of several of these almost willfully ignorant journalists by name. I hope I won't have to do this again. But you watch, I'm just crazy enough to. (Note to nitpicking readers: If my limerick form is not perfect, forgive me. As I said, I'm a
failed poet. Remember that this is for a larger cause.)
Ugh-ugh-ugh
When it comes to GDP reporting
You're fit for a plug
Said Jeremy Peters, "It's 3.5."
Joanne Morrison and Jeannine Aversa
Kept 53 misperceptions alive
Investors, you're getting a tug, so shrug or you'll be mugged.
Now you know how to get on The Business Press Maven's bad side. To get on his good side, it's pretty easy: Just agree with me. I'll usually declare you brilliant.
Gene Epstein, who writes the Economic Beat column for
Barron's, is one of the few journalists I can't help but consider bright, even when he has the temerity to disagree with me. I see rates holding where they are, but
read Epstein's good, interpretive piece about why they might not based on Ben Bernanke's rereading of the unemployment data and fourth-quarter GDP numbers -- which, as Epstein points out, were above expectations.
Whoa! Stop the presses, dude -- you are fit to be put in a limerick. We've had 50% revisions of the fourth-quarter numbers before, going from 3.5 back to what was expected; 3.0 is a whole lot less than that. I knew a guy couldn't be right and disagree with me at the same time.
Two weeks ago, The Business Press Maven went postal on the business media when they kept reporting an obscure, unsourced French newsletter report that
Bristol-Myers(BMY) was going to be taken over by
Sanofi-Aventis(SNY) until it passed for fact.
Unless I've been too heavily medicated to notice, the merger hasn't happened. No surprise there. But while the media loves talking about unsourced rumors, they do less of what I want to hand out a coveted Business Press Maven "Nod of Approval" award for: discussing whether or not the deal would be a good one long-term. Extra kudos, then, are due to
Forbes for doing exactly that (and the writer believes it isn't a good one long-term).
And painfully last:
Fox News announced its new business channel this week, promising to be --
more friendly to corporations than
CNBC? More friendly to corporate flacks and hacks than
CNBC? As in,
less of a service to investors? Is that metaphysically possible? More on this in the months and years to come, but I'm not even sure what to say now. Perhaps a limerick is in order.
