I’ve blogged in the past about how important it is not to get carried away by individual court case verdicts, and to concentrate only on superior court opinions (e.g. from the Tax Court) that change, challenge, or establish precedent. A good example of that would be the Tax Court’s Gross case opinion that put tax-effecting of “S” corporation earnings into play. An opinion by a lower court, although perhaps important in its jurisdiction, does not necessarily apply elsewhere.
By the same token, do not get carried away with economic data. Every day some new statistic is reported by the federal government and is given great play by the media and politicians. These folks often leap to broad generalized conclusions about those daily reports. Today the unemployment report indicated that the economy lost 54,000 jobs in August and that the unemployment rate rose to 9.6% from 9.5% a month ago.
Maybe.
Most economic statistics are based on surveys, since it is impossible to (on a timely basis) count everything that happened. Surveys are, of course, subject to (often undisclosed) margins of error. Moreover, the data are highly statistically processed to adjust for seasonal factors as well as other technical phenomena, and they are almost always subsequently revised. So most of the data cannot be counted accurately, is subject to undisclosed errors, heavily massaged, and ultimately changed!
About the only economic statistics that are truly precise are financial ones: interest rates, foreign exchange rates, and stock market (index) prices. Things like GDP and its components, income, consumption and savings, production and capacity utilization, consumer price indices, and employment statistics are not precise.
Even worse, sometimes the numbers are very misleading. The U.S. labor force (those employed or seeking employment) totals over 150 million people. A loss of 54,000 jobs represents a decrease of less than 0.4% in employment, hardly a significant finding all by itself (let alone the fact that the number is bound to be changed).
The moral of the story is not to be overly concerned about what happens in a specific month or even a quarter. After all, we almost always make annual financial forecasts. What we need to focus on are trends and major cycles, not very short-term fluctuations. Do not worry if your economic outlook for a valuation as of September 1 is not exactly current to the moment: unless something huge is happening (such as the financial crash two years ago, in which case all bets are off anyhow) data as of the end of June is good enough for us.