Thursday, May 12, 2016

Off-Topic: A Comment on Litmus Test Moments

by Bill McBride on 5/12/2016 06:51:00 PM

Some off-topic rambling ...

A few times in life there are public moments (and private ones too) that really make a difference. As example, for economic forecasters, calling the housing bubble and bust is now a litmus test.

Some people, like Larry Kudlow, failed the test.  See Kudlow's June 2005 article: Why the Housing Bears Are Wrong Again

[A]ll the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Florida, to bring down the consumer, the rest of the economy, and the entire stock market [have been dead wrong].

None of this has happened.
I was on the other side (apparently a "bubblehead" according to Kudlow), see my post in 2005: Housing: Speculation is the Key and many other housing related posts in 2005 and 2006. Note: For bonus points, I also called the bottom for house prices.  Of course there are also the people who called the bubble, but have been wrong on just about everything else.  Oh well.

Another litmus test was whether someone supported the Iraq war (especially now among Democrats). Most people are busy with their lives, and rely on the media to vet the arguments for war. But politicians and the media should have been paying close attention (I opposed the Iraq war, and was shouted down and called names like "Saddam lover" for questioning the veracity of the information).

Now we know most of the media failed the American public in 2002 and early 2003, with some exceptions like Walter Pincus at the Washington Post.  Ms. Clinton has been criticized for supporting the Iraq invasion, as did Donald Trump (he claims otherwise now - but that claim is false).  Opposing the invasion helped President Obama in 2008 - it was a litmus test for many voters.

I believe we are seeing a Litmus Test moment right now, especially for Republicans.  I believe, in a few years, whether someone supported Trump or not will make a difference in how people are perceived.  This will make or break some political careers.

For the most part, I avoid politics on this blog (although I do analyze some policies).  But I think this is one of those key moments, so for the record: I am still a registered Republican, and #ImWithHer

Friday:
• At 8:30 AM ET, Retail sales for April will be released.  The consensus is for retail sales to increase 0.9% in April.

• At 8:30 AM, the Producer Price Index for April from the BLS. The consensus is for a 0.3% increase in prices, and a 0.1% increase in core PPI.

• At 10:00 AM, Manufacturing and Trade: Inventories and Sales (business inventories) report for March.  The consensus is for a 0.2% increase in inventories.

• At 10:00 AM, University of Michigan's Consumer sentiment index (preliminary for May). The consensus is for a reading of 89.7, up from 89.0 in April.