I’ve seen a few folks citing the housing numbers and durable-goods numbers out earlier this week as signs the economy is turning around. Headlines like:
Both of these numbers are less impressive than they may seem at first glance.
For starters, new-home sales were up in February from January, from 322,000 to 377,000. But the bar really couldn’t get any lower, as January 2009’s numbers were the lowest level of sales since they started counting in 1963. A 4.7 percent increase off the all-time low really isn’t much reason to celebrate.
The second-worst month on record, in other words, is being cited as a sign of “hope,” “recovery,” and “rebound.”
On the durable-goods figure, we have to look closely at the adjusted number from the previous month. In February, the Census Bureau thought January’s new orders had declined 5.2 percent. But in March, with more data, they concluded January was much worse than their initial estimate, with new orders declining 7.3 percent. The recent headlines about durable goods increasing 3.4 percent is February’s intial estimate compared to that revised January number.
If you compare the initial number of orders for January to the initial number of orders for February, you get a 1.09 percent increase, a much more modest number. And February’s 3.4 percent increase that is generating today’s happier headlines could be revised down, a month from now, to point where it barely represents an increase at all.
Some readers will inevitably suspect someone in government is playing with the numbers to benefit Obama, but I think copy editors are more at fault for the inaccurate headlines.