Skip to main content

Data vs. Feelings - Which Are You Using?

December 24, 2021

The media can provide guidance on how the economy is performing - but are these insights feelings-based or data-driven? Catch our newest TrendsTalk episode with ITR Economics President Alan Beaulieu to learn more about economic expectations for 2022.




Follow Us

SoundCloud   •  Spotify  •   iTunes   •   YouTube

← Back to list of episodes.


The below transcript is a literal translation of the podcast audio that has been machine generated by Rev.

Good morning, everyone. I'm Alan Beaulieu the president of ITR Economics and I'm happy to talk to you today about feelings. We're human beings and we're driven by those, but as economists, we're actually trained to not have a lot of feelings, because feelings kind of get in the way of our forecasting and our analysis. And yet they're an important part of life. We admit that, but I want to talk to you about how feelings kind of depend on the day, and feelings in economics are not reliable. Why am I telling you this? Because there was an article in the New York Times. It was on the 10th of December, and it talked about how the economy was in a rough place and it gave different reasons why it was in a rough place. And a lot of those reasons had to do with the way people were feeling. And we're very careful about that around here. So I just want to talk to you about that for a moment.

We use data that can be verified. So let me give you an example. We look at retail sales, and as we look at retail sales, we look at year over year activity, seasonal activity, the monthly, the three monthly total, all of that, ITR. Now the article about November retail sales said that it was thin and kind of worrisome, an increase of 0.3%. It was just kind of a, oh, things are not good kind of article. Certainly gave off that feeling.

We dove into the numbers and the numbers are actually quite good. The numbers for November on a nominal basis were incredible. As a matter of fact, we had a record high sales in November. We had a extremely good increase from October to November. When we looked at the increase, it was close to the steepest normal. The seasonal rise was the best since 1994, from the March low through November. These were all very incredible numbers.

So we thought, well, let's take out inflation. Let's see what it looks like without inflation. So we come down to the deflated numbers and it was still a very good month. When we look at November on a monthly basis, it was up a steeper than median 1.9% from October. That's incredible. When we look at the year over year, it was up 11.9%. When we look at the seasonal rise, it was the best since 1999, 21 years before. So when you look at all the realities, you get a different feeling. You get the idea that hey, things are pretty good. You get the idea that I should be encouraged about the future, not discouraged about the future.

Let me take that a step further. You can look at the consumer confidence, from the University of Michigan is a favorite source. And as you look at that, the monthly number was well below year ago levels. And perhaps more importantly, the monthly number was at the lowest point that we had seen in eight years, as a matter of fact. And now this is a survey of 50 questions where they asked the respondents to respond how they are doing with their personal finances, how the economy's doing, and the future of the economy. And it came back at the lowest point in eight years while retail sales were doing well.

So what we were doing is we were spending good money, keeping the economy going with absolutely no confidence. Kind of strange, don't you think? Feelings, hard to trust. B2B activity doing well. Wages going up. Jobs going up. Inflation is a problem, but it will be abating as we move through '22 and it'll come back again. But this is a supply chain issue. And we've talked to you about that before.

Today's emphasis is don't get caught on how you or others are feeling. Look at the numbers, because the only way run your business successfully is by the numbers, because tomorrow it'll be a different headline. And the day after it could be back to where we started, could be changed again. The numbers are what count, and as we look at those numbers, the economy's going to grow in 2022 at a decelerating rate of rise. Still growth, though. It'll still be good. It's just at a slowing pace, which is a good thing. Gives us all a chance to catch up. So depending on the day, you look on the numbers and ignore those feelings.

Thank you for joining me today for TrendsTalk. We are ITR.


Since 1948, we have provided business leaders with economic information, insight, analysis, and strategy. ITR Economics is the oldest privately held, continuously operating economic research and consulting firm in the US. With a knowledge base that spans six decades, we have an uncommon understanding of long-term economic trends as well as best practices ahead of changing market conditions. Our reputation is built on accurate, independent, and objective analysis.