13 November 2024

At the Money: What Data Matters and What Doesn't

1Frameworks

5Insights

Listen

Frameworks in this episode

Finance6 steps

Past-Present-Future Economic Data Triad

Read GDP, employment, and housing together to locate the economic cycle

Read →

Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Myth Buster· 1

Myth Buster04:12

Why Economic Sentiment Surveys Often Measure Politics

McBride argues that sentiment indicators are often closer to opinion than objective economic measurement. Political identity can strongly affect respondents' assessments, causing some surveys to reveal who occupies the presidency more clearly than they reveal economic conditions.

Sentiment is difficult to measure reliably
Political affiliation can shape economic responses
Some surveys may proxy presidential approval
Objective activity data is generally more useful

“I think probably the one people should ignore the most is anything doing with sentiment.”
Bill McBride · 04:12

“there are some surveys that that's all it does is really tell you who's president?”
Bill McBride · 04:36

#sentiment#surveys#politics#economic-data

Explainer· 1

Explainer07:36

Housing Inventory Points to Flatter Home Prices

McBride identifies inventory as the central housing variable because it captures the balance between supply and demand. With sales depressed, he emphasizes months of supply and expects its normalization toward 2019 levels to restrain price growth.

Inventory is the key housing measure
Home-buying demographics remain supportive
Inventory remained about 30 percent below normal
Low sales make months of supply especially informative
More normalized supply implies flat or slightly higher prices

“I think the key to watch is inventory.”
Bill McBride · 07:36

“that says that house prices will basically be flat to only up slightly by the end of the year.”
Bill McBride · 08:10

#housing#inventory#home-prices#real-estate

Story· 1

Story08:20

How Pandemic Economics Undermined the 2023 Recession Call

Many analysts expected recession because the yield curve was inverted and housing starts had dropped sharply. McBride looked beyond those familiar warnings to sectors constrained by pandemic supply problems, reasoning that recovering auto sales and easing shortages would support the economy.

The yield curve and housing starts both flashed warnings
Federal Reserve staff also predicted a recession
Auto sales had been suppressed by supply problems
Easing shortages created room for recovery
Pandemic context changed the meaning of standard signals

“what they weren't looking at was other parts of pandemic economics.”
Bill McBride · 09:21

“Auto sales had been really depressed because of supply issues”
Bill McBride · 09:31

#recession#pandemic#yield-curve#autos#forecasting

Tool· 1

Tool05:33

Why McBride Temporarily Removes Rent from Inflation

Official CPI and PCE shelter measures include lease renewals that are still catching up with earlier rent increases. McBride removes rent from the headline calculation as a diagnostic tool because current monetary policy cannot change rent increases originating two years earlier.

Asking rents had become roughly flat year over year
Renewal rents transmit earlier increases with a lag
Shelter accounted for a large share of recent CPI increases
Excluding rent can clarify current inflation pressure
The adjusted reading was much closer to the Fed's target

“monetary policy cannot impact what happened to rents two years ago. It can only impact what's happening today.”
Bill McBride · 06:18

“what I've been doing is I've been taking rents out of the inflation to see where we're at”
Bill McBride · 06:52

#inflation#rent#cpi#pce#federal-reserve

Takeaway· 1

Takeaway10:17

Weekly Jobless Claims Matter Most Near a Recession

The value of an indicator changes with the economic situation. Weekly unemployment claims become especially useful when recession risk is credible, but they need not command equal attention during ordinary conditions.

Indicator importance changes over time
Weekly claims are situational rather than universally central
Claims become valuable when recession risk rises
Monitoring should adapt to the phase of the cycle

“What's important over time changes.”
Bill McBride · 10:17

“That's important when you really do think that there's a possibility of a recession, But that only matters in that particular situation.”
Bill McBride · 10:30

#jobless-claims#recession#labor-market#monitoring