Brad DeLong's Semi-Daily Journal (2004)

It flattens out the noise in the system.

There are strong regional differences. The Midwest economy is still lagging the rest of the US.

The good numbers have been a dead cat bounce.

Why do these news itmes always attribute bad economic news to the weather? Didn't we have bad weather during the late '90s boom?

Ah. not expected = noise. But month-long noise. How about "volatility" as these numbers are month-to-month comparisons and Feb was too impressive to match? Is that true -this is a Midwest economic report and it always lags the rest of the economy? Why do these regional guys mislead us like that?
I go with the warm weather solution as the Utilities had less demand ( everywhere -even in the Midwest).
Matthew, the March employment numbers were "good" and they were definitely not a "dead cat bounce". Animal activists are on your case.

Not volatilaty, Noise. Volatility would mean the true values go up and down. Noise means the measurements go up and down more than the true values. Noise=measurement error.

Of course it is not a Midwest Report. But it does say, "Auto production slid 2.2 percent, and production of wood and fabricated metal products also dipped. Output of high-tech items - semiconductors, computers and communications gear - rose by 1.4 percent.." Guess what? Here in the Midwest, we mfg autos and fabricated metal parts. The tech item mfg is mostly on the coast. So it is a national report, but guess what? The economy is spotty. Unemployment in MI (goodness they make a lot of autos there?) is higher than much of the rest of the country. The economy in the Midwest is lagging behind the rest of the country. Auto production is a big part of that equation. The report addresses that. Hardly "misleading."

"Dead cat bounce?" I'm not familiar with this metaphor. Anyone care to clue me in on what it means in economics?

Dead cat bounce more of a stock market than economic term. It means you do not have a normal rebound after a drop in a variable --
ie, stock price. Make a mental picture of a cat hitting the ground and just staying there.

The industrial production data implies that
1st quarter manufacturing productivity growth slowed to barely 3% as compared to 5.8% in the 4th Q.

Evidence of a very sharp slowdown in high teck sector has been building since yearend. It is also showing up in drop in relative performance of tech stocks even before the last correction on higher long rates and inflation.

But a slight rise in auto sales in March while auto production fell implies auto inventories fell sharply. Inventories had built in Feb as 1st Q auto production schedule was too optimistic. This is true of entire consumer good sector even if very strong March retail sales data was suspect -- half the gain was from garden center sales.

the drop in utility output was a reaction to Feb. In Feb extremely cold weather meant that utility output was unusually high -- in some areas saw brownout like during a summer heat wave.

So after artifical pop in Feb, utility output returned to normal levels in March.

Noise = measurement error. Really? In Signal/Noise ratios this is not true. In the stock brokerage industry, Fundamentals vs Noise might be construed as measurement errors but we are not in that arena are we? This is science and not marketing. The volatility desribes (here monthly ) variations that actually occur. It is not measurement error. The character of Industrial Output actually fluctuates unlike that of ,say, gravity where we (non-physicists) might want to say that different numbers are measurement errors. Sort of like the geographical variations you allude to in reminding us ( you mean me) that Detroit is not Texas.

I thought a "Dead cat bounce", was that if the fall was far enough even a dead cat would bounce.

Drop in utility production is a good thing. I'd like to see it drop a lot further based on a more conservative and efficient use of electricity. Bemoaning that drop just shows how bogus all this focus on GDP is. The West is being ripped apart to satisfy our energy demands. Not a good thing.

Utility production is not a good thing in an economy, namely, if you base economic numbers on how much money utilities are making, if they are making money thanks to HIGH ENERGY COSTS this is a disaster since no one has any money left over for anything else, in the end.

Namely, this is like being a drug addict.

Net loss to an economy.

Cheap energy=growing economy.

Expensive energy=recession or worse.

Let's make the reasonable assumption that March
is "normal." The capacity utilization figures
are frightening. It's true, this could be a
one month blip; but if it's not, then I don't
see how we can make the case for investment to
lead this economy forward. The consumer confidence
numbers don't look too comforting.

Definitely a dead cat bounce, with numbers manipulation by the current administration
ahead of the summer election doldrums.

Brad, if you want to know the current state
of the economy, stop buying. Go cold turkey.
Make your last run to Costco, turn off the
TV, and cancel your cellphone subscription.

Read a bunch of history books, put in a garden,
and then a month from now, come back out of your shell. You'll find nothing has changed, though the cheerleaders will still be catterwalling.

If CG ups the prime, the other shoe drops.

I might be just a bear, but I am not surprised by negative, or stagnant, numbers...I see a fairly long period of transition ahead, five to ten years. A structural adjustment. Like water changing states, heat applied only goes to the change from solid to liquid or gas, and doesn't result in higher temperatures. All the energy is sucked up by the transition.

andrew ( the little bear)
I ( not-so-little bear) prefer the Spinning Top analogy to your thermodynamics. The structural adjustment there is well understood unlike the final stages of the Top where the last stage is beset with unpredictable variations/volatility.
That is, before it comes to a well-understood dead stop.
But are these analogies useful beyond charging us emotionally?

The gain in industrial output in Q1 vs Q4 was roughly 1.6% (which annualized to roughly 6.6%), vs 1.4% in Q4 and 0.9% in Q3 (when GDP was up 8.2%). Given that one month's results can be misleading, I tend to lean on the quarterly stuff to discern trends. The trend is for acceleration in industrial output, not a stall. And, by the way, tech is leading the rise by a vast margin. To the extent that productivity gains rely on tech investment, we are in for more of the same.

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Ascendo tuum - Up yours

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Ira furor brevis est - Anger is a brief insanity. (Horace)

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