If you're puzzled by the economy, don't be. No one knows whether it's going up, down or sideways.
The signals are so contradictory and uncertain that economic forecasts beyond the day after tomorrow are highly unreliable.Even the signal-callers are hedging their bets.
Federal Reserve Chairman Alan Greenspan was asked about the economy the other day and came up with a reply that could be interpreted to mean just about anything. The next day, a wire service reported that Greenspan had predicted a quick end to the recession. A newspaper said he had forecast a worsening of the economy. Another newspaper said he had thrown cold water on hopes for lower interest rates, while a second wire service quoted him as saying: "Our options are open."
"Greenspan seemed more vague than usual," wrote Martin Crutsinger of the Associated Press.
In fact, Greenspan said many things in his testimony before the Senate Banking Committee. Some were dismal. Some were hopeful. Some were ambiguous. You could write the story any way you chose, depending on your personal point of view.
Here is what Greenspan had to say:
"I think the evidence at this stage suggests that the economy is still modestly moving lower, but moving so at a diminishing rate.
"In other words, there are mixed signs beginning to emerge, but at the moment the overall measures that we are looking at still suggest that it is modestly negative.
"We do expect the bottom, if one is to read the signs that we are looking at in some detail at this stage, to occur within a reasonably short period ahead. But as of the moment, the week-by-week, day-by-day numbers that we are looking at still indicate to us that there is a modest decline in the data at this point."
Chairmen of the Federal Reserve Board are especially adept at phrasing their comments in such a way that reporters, after perusing their notes, find that the great man has said nothing at all.
A degree of confusion is unavoidable. That's because the economic statistics seem to be leaning in different directions. Unemployment is rising, but claims for unemployment benefits are slowing down. The stock market is up one week, down the next. Factory orders for big-ticket items are at a three-year low, but most private economists think the recession will end this spring.
My advice is to look around and see how you're doing, how your neighbor is doing and how the family down the street is doing. That may be a better way to judge the economy than listening to forecasts by experts who speak in riddles.