Cheat Sheet Q&A: 


Today’s topic:  Making sense of economic gobblygook


The entry: 

I am trying to find out exactly what “seasonally adjusted” means when the government and other agencies release data.  I’ve seen a few interpretations but it’s still not clear.


What economic numbers are seasonally adjusted and what does it really mean?  GDP?  Labor? CPI? Real Estate?  


The first quarter GDP was a .1% increase but Goldman and others are expecting the first or second revision to be a contraction.  It is my understanding that the full year GDP for calendar 2013 was under the GDP for 2012


It is also my understanding that in the 80’s, US debt was about 30% of GDP and now Debt is over 100% of GDP.  Is this accurate?


Bottom Line:  Ok so there are several parts to these questions.  Let’s break them down.  First up the seasonal factors…


Let’s say that you were an alien beamed down to the United States and monitored the economy.  You didn’t know anything about our society.  You were observing the economy and how much money we spend at stores.  Then suddenly in November and early December you saw something extraordinary happen.  The Americans people started spending significantly more money in stores than they had been spending.  Without context you might think that the economy was going into an extreme economic boom.  Us native types clearly know that’s it’s the holiday shopping season and will be a short lived spike in shopping activity. 


Seasonal factors take all of those “every year” type of factors into account so we can really determine if the economy is doing better or worse than usual and by how much.  Among key seasonal factors, weather seasons, holidays and one time events in key industries.  Next up…  GDP growth.


So US GDP did only grow at .1% in the first quarter of 2014 (before revisions) and most economists do believe that by the time the dust settles the economy will have contracted for the first three months of 2014.  With regard to 2012 and 2013 economic growth…

  • 2012 Economic growth was 2.8%
  • 2013 Economic growth was 1.9%

Indeed the economy did slow last year and only continue to in early 2014.  It’s widely expected that we’ll see a significant second quarter bounce.  I’m of the mindset that we’ll see 2.5 to 3% growth.  And last but not least debt to GDP.


It’s true that debt to GDP was in the 30% range during the 80’s – though it was on a steady rise.  In 1980 US debt to GDP was at 32%.  By 1990 it was up to 50%.  And it’s now true that debt to GDP is at about 100%.  At the end of 2013 US debt to GDP was at 99%.

Hope that helps…


If you have a topic or question you’d like me to address email me:


Audio Report:



What you need to know before you rent a car:


Bottom Line:  GM just set a record for recalls in a year for an American auto company with 13 million vehicles having been recalled already (previously the record had been 10.7 million) and it’s only May.  As you likely know many other auto company also have had recent recalls.  All of this recall activity has put a big strain on the rental car industry. 

Most of the major rental car companies have built in deals with dealers so that when the dealers need a rental for a customer who is having their recalled vehicle fixed, they provide a loaner to the customer.  The overwhelming rush of recalled vehicles and demand for rental cars had led to wide spread shortages of rental cars around the country. 

If you are going to be in need of a rental car at any time over the next month (and especially this weekend), you need to ensure you have your rental arrangement handled ahead of time.  Otherwise you may find no available rentals or only the highest and most expensive models available. 


Audio Report:


Google just dramatically changed its organic search results – what you need to know:


Bottom Line:  For the 4th time in Google’s history they’ve dramatically changed the way organic search results a determined.  If you just suddenly saw a drop off in response from your organic search – that’s most likely why.  This update is called Panda 4.0.  Many people may call it a four letter word. 

EBay and EBay sellers are known to be the biggest overall losers with the new search formula with 80% of EBay’s search results being diminished.  Here’s what you need to do if you rely on Google search results for your business:


·        Identify all of your previous key search words and phrases (what brought people to your website)

·        Search them yourself and see where you rank

·        Compare your new rankings to your competitors


It may be possible for you to be better off than you had before.  If you had been successful previously however this could be a real issue for you to address. 


Google will tell you that these types of changes are made of for the benefit of users as the try to prioritize the most relevant search results to its customers.  That may be true to a point but I also believe that they do this in part to try to encourage increased paid search for companies who suddenly aren’t getting the results they used to.


Audio Report:


Condos are king but the housing market is changing:


Bottom Line:  There was a dramatic misreporting of the existing home sales information from the National Association of Realtors yesterday.  Every report I came across talked about the increase in existing sales.  That is the spin from NAR, not the real story.  In real-estate, like all other facets of the economy, the information you should look at to compare performance is year over year results.  Not month to month results.  NAR highlight the 1.2% increase in existing home sales from March to April (whoopdeedo anyway) but ignored the 6.8% decrease year over year.  That’s the real number.  Here’s what really happened in housing in April:


  • 6.8% decrease in sales year over year
  • Condos and townhome sales increased by .5% while single family home sales declined by greater than 7%
  • Average home price was 5.2% higher year over year

Other notable number:


  • 81% of condos were purchased with cash


So what to make of this.  If we saw a near 7% decline in sales with a simultaneous decline in price it’d be time to worry.  Instead we still saw a 5.2% increase.  Now that is the smallest price increase since the housing recovery began a little of two years ago.  So it’s clear that the housing recovery has matured to the point to where activity is back to near normal.  The average price gain annual for real-estate historically is 4%.  So the recovery is still intact but it’s slowing down and it’s going to be important to watch the housing market closely in months to come.  If real-estate were to a downturn this summer we could have bigger economic issues on our hands. 


Audio Report: