2009-05-13

A clear example of Socionomics

This morning, Yahoo! Finance provided a clear example of socionomics at work. The economy is in the middle of a bad recession and retail sales fell 0.4 percent in April. No surprise. Analysts expected a 0.1 percent increase, but analysts are notoriously wrong and were clearly betting against the grain. Also, given that the analyst estimate is an average, I'd bet there were some overly optimistic ones who pushed that number from zero or even less than zero.

The headline speaks to popular sentiment, however, obsessed as people are with "green shoots" and thoughts of recovery. The news here isn't the actual news, it's the way the headline is phrased that offers a glimpse into the herds' mentality.

Update: Bloomberg wants in on the action. ‘Good Bad’ Economy Inspires Consumers as Slump Eases
The Sterenbergs are among Americans who are cracking open wallets as the U.S. economy begins to stabilize after the federal government spent, lent or pledged as much as $12.8 trillion to end the longest recession since the Great Depression, according to data compiled by Bloomberg.

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