On the last day of February, we’re talking about the value of the GDP number. Why do we pay so much attention to it when it is revised so wildly every month?
John Carney of the Wall Street Journal and Leigh Gallagher of Fortune explain:
Carney: “Lots and lots of people throuhgout the government and private enterprise use it while they’re planning things... Even though it gets revised and revised, so you use what they’ve got.”
Gallagher: “It’s the one number that takes the temperature of everything at once. In theory, everything is baked into this number. In theory this is it.”
Carney: “Look, every time you go to the doctor, they take your blood pressure. That doesn’t tell you why your blood pressure is high or low, but you still pay attention to the number, and then you get to investigate what happened after that.”
Fed Chair Janet Yellen, took a trip to Capitol Hill this week. She testified that things have “softened.” Should we be worried?
Carney: “I’m a little worried. Not just by the GDP number.”
Gallagher: “I mean, I don’t know. The Fed is still not making any changes to its plan to slowly taper here. The one number I worry about the most is probably the jobs number. That has been surprisingly negative the last few months.”
The next numbers in question: Housing. For those, we’ll have to keep watching.
Gallagher: “They were mixed. Existing sales were a little bit better. One of the most important numbers for the housing market is going to come next month… we have so many young people stuck at home, living with their parents… as they start to move out, that portends well for the housing market.”
“If you can’t get a job, you can’t move into your own apartment.” John Carney
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