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Hell hath no fury like a Business Press Maven spurned, but heaven hath -- uh, well, look: When you do as The Business Press Maven says, I wipe little tears of joy from my eyes. So let's get right down to business, a tissue in one hand and brass tacks in the other. Reporting of the Commerce Department's gross domestic product, my arch nemesis, came our way Friday morning.
The first stab at the first-quarter GDP came out at 1.3%. But Business Press Maven readers and now an impressively growing share of the business media know that this number has to be looked at with caution. It is due to be revised twice and might end up 50% higher or even lower.
That means that you can't go too far in drawing conclusions about what this number says about the economy. Or, if you want to, go ahead and draw. But just make
sure the reader knows in no uncertain terms that this 1.3% number may have the lifespan of a June bug.
So how'd the business media do? With some glaring and pathetically inexcusable exceptions, much, much better. What a welcome departure. In the second sentence of its
The Wall Street Journal
described the number as "the first estimate." At the
, dynamic duo Howard Schnieder and Nell Henderson
and include this wonderful paragraph only four down:
"Today's GDP report is preliminary: A similar report on slow growth last year was ultimately revised sharply upward."
has taken to letting readers know when the revisions are due to be issued, in May and June, and called this first estimate "the advance report." True 'dat.
Those of you who got it right, on behalf of investors I award you the coveted Business Press Maven "Nod of Approval" this week.
As for my dreaded "Back of the Hand" award: Compare all this good sense and responsible reporting to
. Then we have the
, all of which draw all manner of conclusions about this preliminary, advanced number without letting the reader know that, like fashion, you might just blink and find it gone. These journalists seem not to care, inclined to keep on as they have. And I'd bet that when new GDP numbers come out, these same folks will run with a whole new thesis, complete with passively constructed (read: tush-covering) lines like, "the economy was hotter (or colder) than previously thought." Than previously thought by whom?, I ask.
Now, I'm more lover than fighter, but all journalists who set up investors for confusion should know that, once again, The Business Press Maven will make them the subjects -- by name -- of a highly insulting and incredibly poorly written limerick, to appear in a future column. I hate to take measures this drastic, but once again they've forced my hand. And for all of you who did a good job, thanks for the good cry.
On a tangentially related topic, it has been like a reflex, a throat clearing, for many business journalists to say that the housing market is everything in the American economy. The latest entry, one of so many, came this week from a
New York Post
. "No doubt about it, the housing industry is in trouble," he led, getting no argument from The Business Press Maven, before starting a big one: "And as housing goes, so goes the national economy."
Uh, not quite.
Housing -- as we may have seen in a GDP number that may or may not hold --
have slowed the American economy. In truth, even assuming a heavy upward revision, it
did. But as far as investors are concerned, companies have been making money on international trade hand over fist, head over foot, elbow over knee.
As Business Press Maven readers well know, there is nothing I have been more positive about than the long-term economic effects of international trade. As I
wrote a while back:
One of the biggest long-term positives of the American economy -- and one of its least noted -- is the potential for lasting increases in exports thanks to globalization. The American economy will still feel the positive effects of this ultimate trend when our children's children are pontificating about stock market movement.
Along with capital spending by businesses, this is the reason (as all you
know) that I have long made the case that while the housing market will be grim, stock pickers will still find it a good period.
But even in my uncanny wisdom and foresight, I did not anticipate the additionally positive effects on American-based multinationals of burgeoning international trade with a weak dollar. Which is why, as much as I like to gloat -- vanity becomes me -- we now have to shift gears, or rather keep ongoing track of how much the weak dollar is adding a lift.
We need to be careful, going forward, of what might happen to all of our investments if the dollar fluctuates. A stronger dollar could mean less benefit, in some cases. An even weaker dollar could scare away foreigners. Again, no imminent concerns.
But as The Business Press Maven
remarked earlier this week when
reported good results, we need to have a constant working knowledge of how much strength was the result of currency. And business media, you gained a bit of currency with The Business Press Maven with your improved handling of the GDP numbers.
As for those who clung to the dumb past -- well, I'm ignoring my family and God this weekend to immortalize you in a limerick.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;
to send him an email.