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No, I'm not claiming that bank account balance itself is an indicator of anything. But when there are a bunch of other indicators, and I see my bank account bal
by jaywalk 4y ago
No, I'm not claiming that bank account balance itself is an indicator of anything. But when there are a bunch of other indicators, and I see my bank account balance going down (and I know I'm not alone on that) I'm not particularly interested in hearing why it's actually not a recession.
- bumby 4y agoHonestly, that's likely a cognitive bias about weighting of the indicators in your assessment. Naturally, your personal bank account will be over-weighted (just like in the cliche above). And there'll likely be an availability bias regarding the shrinkage of GDP. For one, it's easy for media to glom onto and two, it's a really easy metric for people to understand. However, what you're probably not doing is factoring in all the other metrics that matter. Unemployment rate, the relative contraction in comparison to previous recessions, GDP in constant dollars, GDP in present dollars, business sales, industrial production, hours of non-farm employment, wage growth, etc. are all factors that the NBER uses to assess whether conditions meet the actual definition of a recession. Point being, the simplified models we use as laypeople (e.g., GDP growth + bank account) create much more uncertainty. Our level of confidence should be inversely related to that uncertainty. It doesn't mean they're wrong, but that our conclusions should be loosely held.