The Business Press Maven

Return to Article

The Crushing Weight of GDP

Marek Fuchs

Gross Domestic Product coverage, as you know, is an anvil strapped to The Business Press Maven's back.

And for those keeping score at home? You can now consider me officially crushed beneath its weight.

To paraphrase Churchill -- or, more accurately, to totally butcher a great quote from a great man for my own cheap-shot purposes -- never has one issue done more to needlessly confuse more investors.

But, investors, yesterday was the worst. And you have to be aware so you are not taken in by the incompetence, the idiocy and the tush-covering that is standard business-media practice on the issue.

Bear witness: The Commerce Department on Thursday revised fourth-quarter gross domestic product to 2.5 %, up from 2.2%. This comes three weeks after The Commerce Department revised fourth-quarter gross domestic product down to that weakening (though, of course, temporary) 2.2% from a rip-roaring (though just as temporary) 3.5%.

Sorry, I forgot to warn you to don a neck brace. As you know, I don't fault the Commerce Department for the lurching numbers. It is a government agency -- I'm impressed if they get it right by the third time.

It's the business media, as I've pointed out so many times -- even to the point of writing a mocking limerick when these numbers were originally reported -- that is at fault. Each initial report is taken as if it is a standing fact, with all manner of conclusions drawn from numbers that have the shelf life of heavy cream. This, more than any other misleading misreporting from the miscreants in the business media, confuses investors. Who knows where the economy is if descriptions of where the economy is float on the tide of these numbers?

Talk about a Goldilocks economy. In this one cycle of revisions, we have seen articles about how the economy was, at 3.5%, too hot, then, at 2.2%, too cold, and finally, at 2.5%, just right.

And what did the very best of the business media have to offer? Even The Wall Street Journal, considered by too many to be the financial bible, writes about Thursday's revision without even mentioning the originally reported 3.5%!

That is peculiar -- because explaining this dance done around revisions is the key element to informing investors, which is purportedly the Journal's mission.

But maybe they have reason to sweep that 3.5% number under the carpet.

After all, back in January -- when what The Business Press Maven was angrily calling a temporary number was reported, The Wall Street Journal was busy legitimizing it at face value in a headline before drawing all sorts of false conclusions about the economy which -- before the subsequent two revisions -- was hot.

Look at this lead:

"If the housing slump has the potential to sink the U.S. economy, that danger wasn't evident in the latest data on economic growth. In the fourth quarter, consumers did more than enough shopping to offset a sharp drop in housing, propelling the nation's economy to a seasonally and inflation-adjusted growth rate of 3.5%."

The Journal, to it's measured credit, was one of the few news outlets to even mention the possibility of a subsequent revision, burying the line "Though still subject to revisions," halfway through the article, before it was off an running at the mouth again: "...the solid GDP report amply exceeded economists' expectations and adds credence to the idea that the Federal Reserve's inflation-fighting efforts, which some had worried would trigger a recession, haven't broken the economy's momentum." An economist is soon quoted saying: "The soft landing is over, and I'm not even sure there was a landing."

Anyhow, there was a landing. But it was that anvil on The Business Press Maven's back.

Speaking of weight landing, a lot of print has hit the earth lately concerning things about Wal-Mart (WMT Quote) that don't matter much to investors. Don't be taken by these articles on the fired advertising executive scandal, complete with racy emails (and, really, are there any other kind?), which puts the entire focus on Wal-Mart's advertising efforts.

Also, do not, as an investor, seek answers to whether Wal-Mart's stock can get its groove back in articles like the big New Yorker opus that just hit the stands. Why? Well, much like the advertising articles, The New Yorker tome focuses on something that doesn't really matter much to Wal-Mart at this point -- their public relations effort.

Granted, the media loves tales about big public relations efforts, especially when war rooms are established and all those failed journalists are put to work for big money. But from an investor standpoint, keep an eye on what all these articles barely, if ever, even touch on: Wal-Mart's merchandising effort. In a word: it has been totally lacking. They have been beaten by Target (TGT Quote) and Kohl's (KSS Quote).

Let The New Yorker ask the question they do in their headline: "Can the company co-opt liberals?" But it doesn't matter if they hire 100 people or not a single person from the Edelman public relations firm. They need to update their merchandising to budge the stock. Can the company co-opt their old customers is the only question that matters to investors. And the only answer depends on the quality and innovation of their stale merchandising.