Tuesday, June 22, 2010

Show Me the Trend. . .

Often when you get your economic news from the media, you lose a vital piece of information--the trend. Trust me, I read the (electronic) news everyday--I know its value. However, news articles, radio sound-bites and press releases typically reveal just the most recently released tidbit of information. The trend is obscured.

For example, every week the Department of Labor releases the count of the previous week's count of U.S. initial claims for unemployment insurance. One week it's up, one week it's down, the next week it's up. It can drive you crazy! What's the "real" story? Are claims up or are they down? Does a surge in claims last week mean the economy is tanking or is it an anomaly? When I get my information piecemeal, I can't really tell.

Unfortunately, this particular weekly data series is wildly erratic and subject to seasonal trends. Using a four-week moving average or seasonally adjusted smooths out the trend somewhat. But nothing succeeds like graphing the trend. As you can see from the chart, in general, 2010 initial claims are down from 2009--the worst year of the recession. That certainly suggests the economy is doing better.

Remember, one month doesn't make a trend--whether it's the unemployment rate, unemployment insurance claims, job growth, retail sales, or home starts. To get the full story check out the data for the last year or two.

If you want to track current economic trends for your particular county, we're here to help. Click on this link, select your county, then click on the "Current Economic Snapshot" link on the right-hand side of the page.