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What Ever Happened To An Old-Fashioned Economy?

We’ve all heard it. ‘The economy’ is slouching and the future looks bleak for everyone. But when you look at the statistics, we’re actually better off than you’d expect. How, you might ask? Well for starters, there is no such thing as a vast encompassing ‘economy’, at least not anymore.

Inflation, unemployment, and GDP growth are all just averages that the Bureau of Labor Statistics compiles to measure our nation’s economic health. Since there are over 300 million Americans, these ‘large averages’ aren’t exactly perfect. Think about it, how could you compare the real estate economy of Manhattan to that of, say, the heart of Mississippi? When you compare apples to oranges, they don’t average out to be bananas.

Sure there are many economies that have been slowing down. Detroit automakers are staring at a 6.9% unemployment rate, and foreclosures in California are more rampant than other parts of the country, but that’s just the tip of the iceberg.

The real foe is not the perception of a national ‘economy’, but the conclusions that economists, investors, and citizens draw from the incomplete information they’re provided with. Trying to simplify so many complex and unrelated markets into one ‘economy’ doesn’t work. Information is getting easier and easier to transmit, but it’s also getting harder to interpret correctly.

So the next time you hear anything about a ‘slumping economy’, take a second to evaluate your ‘personal economic health’ before making any big decisions.

– Colin Constantine