Masters in Business
At the Money: What Data Matters and What Doesn't
Wed Apr 24 2024Description
Learn how to use economic data to make informed decisions and cut through the noise of opinions. Discover key data series to follow and understand their predictive value. Gain insights into inflation trends and the real estate market. Find out how to predict recessions and which data series investors should focus on.
Insights
Economic data provides a more accurate picture of the economy than opinions.
Opinions about the economy can be misleading, but economic data can reveal the true state of the economy.
The employment report is a reliable indicator of current economic conditions.
Monitoring the employment report can provide valuable insights into the health of the economy.
Housing starts and new home sales can predict future economic trends.
Increasing housing starts and new home sales generally indicate a strong economy, while sharp decreases could signal a potential recession.
Opinion-based data series should be ignored for accurate analysis.
Surveys based on opinions can be influenced by political biases and may not provide meaningful insights.
Excluding rents from inflation measures can provide a clearer picture of inflation trends.
Rents have experienced a surge due to household formation, but excluding them from inflation calculations can help understand underlying inflation trends.
Inventory levels are a key factor to watch in the real estate market.
Monitoring inventory levels can provide insights into future house price trends.
Considering all factors, a recession was unlikely in 2022 despite concerns.
Factors such as pandemic-related supply issues impacting auto sales were not taken into account by many economists, leading to incorrect recession predictions.
The unemployment rate, payroll report, and inflation reports are key data series for investors.
Monitoring these data series can help investors make informed decisions and understand the current state of the economy.
Chapters
- Introduction
- Using Economic Data
- Predictive Value of Data Series
- Data Series to Ignore
- Understanding Inflation
- Real Estate Analysis
- Predicting Recessions
- Key Data Series for Investors
Introduction
00:00 - 01:06
- Grammarly is a powerful tool that goes beyond spell check and can help with writing an instant first draft in just a few clicks.
- Economic predictions are often based on opinions, but economic data can provide a more accurate picture of the state of the economy.
Using Economic Data
01:06 - 03:07
- Bill McBride from calculated risk has been using economic data to accurately analyze the economy for the past two decades.
- Key economic data series to follow include the Employment Report, GDP report, housing starts, and new home sales.
- Surprises in the data can provide insights into what is changing in the economy.
Predictive Value of Data Series
03:07 - 04:12
- The employment report provides the best indication of what is happening in the economy currently.
- Increasing new home sales and housing starts generally indicate a healthy economy, while sharp decreases could signal a potential recession.
- However, no model is perfect and unexpected events like the pandemic can impact predictions.
Data Series to Ignore
04:12 - 05:29
- Opinion-based data series, such as sentiment surveys, should be ignored as they can be influenced by political biases.
- These surveys often reflect people's opinions about who is in power rather than providing meaningful insights.
Understanding Inflation
05:30 - 07:45
- Inflation is an important topic that impacts the decisions of the Federal Reserve and interest rates.
- Rents have experienced a surge due to household formation, but current asking rents are flat.
- Monetary policy can only impact current rents, not past increases.
- Excluding rents from inflation measures can provide a clearer picture of inflation trends.
Real Estate Analysis
08:31 - 09:34
- Inventory levels are a key factor to watch in the real estate market.
- While inventory has been low, it is starting to increase, which could lead to more stable house prices.
- Demographics and supply and demand dynamics also play a role in the housing market.
Predicting Recessions
09:34 - 10:57
- In 2022, there were signs that a recession was not imminent despite concerns about an inverted yield curve and a drop in housing starts.
- Factors such as pandemic-related supply issues impacting auto sales were not taken into account by many economists.
- Considering these factors, it was clear that a recession was unlikely.
Key Data Series for Investors
10:57 - 12:56
- The unemployment rate and payroll report are critical data series to monitor for investors.
- Currently, inflation reports are also important due to recent trends in rents.
- Investors should be aware of where we are in the economic cycle and pay attention to key indicators.