February 28, 2009

Headlines Support Obama's Claim

Even Drudge has gotten into the act with a headline proclaiming that it's been the worst year since 1933. It's a weak claim and a disingenuous comparison. Following the Drudge link to the Wall Street Journal, we find the following description of events;

The Dow Jones Industrial Average dropped 119.15 points, or 1.7%, to end at 7062.93. The blue-chip benchmark ended down 937.93 points, or 11.72% on the month -- the worst percentage drop for February since 1933, when it fell 15.62%.
The Dow industrials have fallen six months in a row and are now more than 50% off their record highs hit in October of 2007.
That certainly is bad. But unemployment, interest rates, and other indicators are if not fine, then not devastated. In fact, in decent shape, especially considering the screaming headlines. It's the stock market that's suffering the hardest. Yes unemployment is rising but let's not forget - it's a lagging indicator of the economic situation, not a leading indicator. Which means that while unemployment may rise for a while, the worst could very well be past. At least from a recessionary perspective. There is still the distinct possibility hyper-inflation of the stimulus to come.

Here's the real crux of the headlines supporting Obama issue - the headlines, like unemployment, are not the leading indicator. They are a lagging indicator and they are lagging behind Obama's words. Obama speaks - the markets plunge. Put another way:

Is the President oblivious or is he deliberately trying to destroy the free market? At this point naively oblivious is sadly, the preferable option.

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