- The stock market is not the same as the economy. When the stock market was rising, it didn’t mean the economy was good. When the stock market is falling, it doesn’t mean the economy is bad (see here)
- Much of the growth of the federal deficit went to fund economic growth abroad, not in the U.S. Yes, I know that the official data shows that real imports are smaller today than when the recession started. It’s not true.
- The official data are wrong. Real import growth is stronger than the numbers show, productivity and real GDP growth are much weaker. (see here).
- The last thing the U.S. needs is another stimulus to consumption. Consumption leaks right out the door as higher imports.
- The U.S. should be a production economy, not a consumption economy. It’s time to stop chasing low consumer prices and focus on investment in physical, human, and knowledge capital. That’s the only path to sustained prosperity.
Steve Pearlstein of the Washington Post has a good piece on measuring the economy in an age of globalization (Self-reflectiveness alert: The piece does mention the work Sue Houseman and I have done). He writes:
A frequent mistake — one of which I am as guilty as anyone — is using the performance of the broad U.S. stock market indexes, and the companies that comprise them, as a proxy for the performance of the U.S. economy. Until the late 1990s, that might have been a reasonable presumption. Since then, however, most of the large companies reflected in those indexes have transformed themselves into global enterprises with global supply chains, global sales, global workforces and global sources of capital. That their shares are listed on a U.S. stock exchange is something of an historical artifact.
Steve makes a great point, that other journalists need to read very closely as well. I might write up a list of 10 “do’s and don’ts” for writing about the global economy.