Saturday, September 8, 2007

Why I don't really get macroeconomics

If a big US employer says they're going to let 12,000 people go (as in fact one mortgage company did say this week), the stock market always goes up, because the stock market hates a tight labor market.

But . . . when the unemployment numbers for August are significantly lower than predicted (as they were for last month), the market drops 250 points.

What's the difference? I have to conclude it's not that they mind more Americans out of work (they don't mind; see paragraph 1), it's that it spooks them to be reminded that their forecasts aren't really worth much, even if they had an administration that was feeding them honest, uncooked data to begin with.

Fear and greed. Greed and fear. And numbers no one really understands. Is that really all there is?

Well, at least I'm getting the "fear" part down pretty good.

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