The spin on this morning’s awful (and they were awful despite some nth derivative improvement) Case-Shiller numbers is that they’re old and backward looking. This is May, you know, and those numbers are from March; case dismissed!
Of course, pretty much all data that’s collected, organised and reported is backwards looking, in the sense that the collection happened before right now.
Still, we’ve decided that some indicators are just, well, forward looking. Consumer sentiment? Yeah, now we’re talking. The stock market? Yep, it looks 6 months (supposedly) ahead, so today’s gain means good stuff 6 months from now.
But what’s the truth in that? Felix Salmon points out that the stock market has pretty much tracked unemployment over the last few years — it certainly hasn’t shown much indication that it’s far ahead of the game. As one goes down, the other goes up.
Then there’s the fact that the much vaunted index of leading economic indicator is in large part weighted by the stock market. As the Pragmatic Capitalist pointed out, the S&P’s recent surge (since the March lows) contributed over half of the recent gain in this index, pretty much rendering it moot (or at least totally circular). We’d also guess that in large part, today’s spike in consumer sentiment is due to the stock market rallying so hard.
So putting on our sceptical hat, we’d basically say that a lot of the indicators we’re getting are basically just different ways of showing that the stock market is heading up, which is great, but we already knew that and we’re ready for a little more.