Friday, May 22, 2009

Looking Backward

The story in yesterday's Wall Street Journal looks pretty dire: World Economies Plummet! Steep declines in the economies of three of the U.S.'s biggest trading partners!

But let's take a closer look: the story focuses on reports of shocking declines in the economies of Mexico, Japan and Germany. Those nations posted their worst quarterly declines in anywhere from 14 years (for Mexico) to 44 years (for Japan). Mexico's economy contracted at an annualized rate of more than 20 percent.

All that news results from the economic figures being posted for the first quarter of 2009. So these drops aren't something that those countries are living through right now; they reflect their economic performance through the end of March.

We already knew that the world economy was in serious trouble in the beginning of this year; the WSJ article simply confirms that. It doesn't say anything about what's been going on in the world economy in the past couple of months. Whether or not the Japanese and German economies have rebounded yet is something no one knows.

Remember, economic statistics are mostly backwards-looking. Most of the reports you see in the papers concern things that have happened in the past.

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