The question really is not whether one is coming but would they tell us if it were? In the movies when an asteroid is headed towards Earth, the government decides to keep the impending doom from its citizens to protect them from the horrible truth. Then typically about 3 days from impact, the secret of the approaching fate is revealed along with a plan to save the day. Is it possible that the US government is sugar coating the truth to protect us, shelter us?
The Chinese government is notorious for embellishing their economic numbers. Is the US government taking a page out of their red book on crowd control.
One possible sign of the potential sugar coat could be in economic data revisions. When data is released the markets react based on whether they meet, miss or exceed expectations. If a market rallies on exceeded expectations, shouldn’t that same market give back those gains if that data is revised down the following month? Most of the time the market ignores these revisions and may actually rally again if the data shows another exceeded expectation even though the data may have actually been negative.
For example; if monthly retail sales went up month over month 1.4%* then the next month they revise this number to -.4%*, but the current month over month sales went up 1.8%. Has retail sales really gone up that much? The markets probably would have rallied the 1.4%* and the 1.8%* if they exceeded expectations. But the data is misleading. Lets simplify this information by using small numbers:
Month 1: $100.00 in retail sales
Month 2: $104.00 in retail sales (1.4% improvement over the previous month)
Month 3: $107.57 in retail sales (-.4 revision plus 1.8% improvement)
*The numbers from the above example are made up and are not real.
So on the surface retail sales going up 1.8% looks good, but retail sale really only went up 1.757% over 2 months. This data becomes even more confusing if it is revised the following month.
Economic data did not predict the beginning of this financial crisis, what makes you think that it will predict the end?
