No Result
View All Result
SUBMIT YOUR ARTICLES
  • Login
Wednesday, October 29, 2025
TheAdviserMagazine.com
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
No Result
View All Result
TheAdviserMagazine.com
No Result
View All Result
Home Market Research Economy

Can Surveys Provide Insight Into the State of the Economy?

by TheAdviserMagazine
3 months ago
in Economy
Reading Time: 5 mins read
A A
Can Surveys Provide Insight Into the State of the Economy?
Share on FacebookShare on TwitterShare on LInkedIn


In order to gain insight into the state of the economy, some analysts utilize consumer and business surveys. Randomly-selected consumers and businesspersons are asked to provide their views about the state of the economy. If a survey shows that the majority of those surveyed express optimism, it is regarded as good news for the economy. Conversely, if the majority of those surveyed are pessimistic, it is taken as a bad omen.

Since the information regarding economic conditions is dispersed, the chances of any particular individual having an accurate picture of the state of the economy are low. Hence, it would appear that selecting a large number of individuals randomly has a higher likelihood of securing an accurate picture of economic conditions than one individual. It is quite possible that a group of individuals will have more information than any given individual. However, more information does not necessarily mean a better understanding of economic conditions.

In order to ascertain reality, any information must be processed through a theoretical framework. Whether the assessment of economic conditions “makes sense” is determined, not only by the amount of information available, but also whether a theory is aligned with reality. As long as the individuals surveyed have not disclosed the theories behind their views, there is no compelling reason to regard various confidence or sentiment surveys as the basis for the assessment of the state of the economy.

Also, consumer and business surveys are considered useful because these surveys could establish likely changes in the demand for goods and services. Thus, an increase in consumer and business confidence indexes can be associated with an increase in the demand for goods and services. Conversely, a decrease in the indexes raises the likelihood that the demand for goods and services will decrease. Given the popular view that demand causes supply, it seems that by establishing the likely direction of the confidence indexes one can ascertain the likely future course of the economy. However, following the Say’s law, we know that increases in supply allow for increases in demand (i.e., supply causes demand and not the other way around). What is required for economic growth is production, saving, and development of the capital structure. Furthermore, according to Mises the knowledge of the future can only be qualitative,

Economics can predict the effects to be expected from resorting to definite measures of economic policies. It can answer the question whether a definite policy is able to attain the ends aimed at and, if the answer is in the negative, what its real effects will be. But, of course, this prediction can be only “qualitative.” It cannot be “quantitative” as there are no constant relations between the factors and effects concerned.

Can Positive Thinking Prevent a Fall in Economic Activity?

Assuming that expectations are the key driving force of the economy, some commentators hold that “positive” thinking and large doses of “good” news can prevent the development of pessimistic expectations and, in turn, bad economic conditions. According to this way of thinking, individuals are depicted as driven by a psychology susceptible to wild swings. It is then crucial not to upset this psychology in order to keep the economy prosperous. Hence, whenever various commentators discuss the state of the economy, they try to portray the bright aspect of it. Even when the economy falls into a recession, various influential commentators are very guarded in their speech. On this, Rothbard wrote,

After the disaster of 1929, economists and politicians resolved that this must never happen again. The easiest way of succeeding at this resolve was, simply to define “depression” out of existence. From that point on, America was to suffer no further depressions. For when the next sharp depression came along, in 1937-38, the economists simply refused to use the dread name, and came up with a new, much softer-sounding word: “recession.”

From that point on, we have been through quite a few recessions, but not a single depression. But pretty soon the word “recession” also became too harsh for the delicate sensibilities of the American public. It now seems that we had our last recession in 1957-58. For since then, we have only had “downturns,” or, even better, “slowdowns,” or “sideways movements.” So be of good cheer, from now on, depressions and even recessions have been outlawed by the semantic fiat of economists; from now on, the worst that can possibly happen to us are “slowdowns.” Such are the wonders of the “New Economics.”

The main reason for this gentle talk is a view that soft language will not upset individuals’ confidence. If individual confidence is kept stable, then stable economic activity will allegedly follow. Therefore, because of these assumptions, many economists hold that government and central bank policies must be transparent. If policies are made known in advance, surprises will be avoided and volatility will be reduced.

Instead, what matters is not whether expectations are stable, but whether expectations correspond to reality. Stable expectations cannot undo the damage caused by loose monetary and fiscal policies. Moreover, irrespective of whether individuals are successful in identifying the facts of reality or not, these facts will assert themselves.

Expectations in Free versus Hampered Markets

Expectations emerge in response to an individual’s evaluation of the facts he knows and his presupposed theory (whether consciously acknowledged or not). In a free market economy, whenever individuals form expectations that run contrary to reality, this brings about consequences that incentivizes a renewed evaluation and different actions.

For instance, as a result of an incorrect evaluation, too much capital was invested in the production of product A and too little invested in the production of product B. The effect of the over-investment in the production of A is to depress profits, because the excessive quantity of A can only be sold at prices that are low in relation to costs. The effect of under-investment in the production of B will raise its price in relation to cost, and will raise its profit. It is likely that we would then see a withdrawal of capital from A and a channeling towards B, implying that if investment goes too far in one direction, and not far enough in another counteracting forces of correction will be set in motion. In a free market, reality reasserts dominance quickly in a free market because ignoring it is costly.

On the other hand, this is not the case in a distorted market economy. By enforcing their policies, governments and central banks can set a platform for a prolonged deviation of expectations from reality. This results in severe distorted expectations and costly consequences.

Conclusion

We can conclude that, in a free market economy, individuals’ expectations will have a tendency to move in tandem with reality. This is in contrast to a hampered economy where government and central bank policies give rise to expectations that are uncoordinated with reality. Therefore, the fact that a large group of people express an opinion regarding the state of economic conditions does not make it more accurate than the view expressed by any particular individual.



Source link

Tags: economyinsightprovidestateSurveys
ShareTweetShare
Previous Post

Retiring 15 Years Early by Buying Rentals on Repeat (HELOCs!)

Next Post

Why Risk Tolerance Questionnaires Can Be Powerful For Prospects (Not Just Clients)

Related Posts

edit post
From NEOM to AI and tourism, Saudi Arabia’s priorities are shifting

From NEOM to AI and tourism, Saudi Arabia’s priorities are shifting

by TheAdviserMagazine
October 29, 2025
0

Digital render of NEOM's The Line project in Saudi ArabiaThe Line, NEOMWhen Saudi Arabia first announced plans to reinvent its...

edit post
The Trump Administration Is Lying Us Into Another War

The Trump Administration Is Lying Us Into Another War

by TheAdviserMagazine
October 29, 2025
0

Last week, President Trump ordered an aircraft carrier strike group into the waters off Venezuela. The deployment of the USS...

edit post
How Tariffs Hurt the Ones You Love

How Tariffs Hurt the Ones You Love

by TheAdviserMagazine
October 29, 2025
0

Yves here. Props to the VoxEU authors for a clever headline as well as an informative post. First, they’ve done...

edit post
Bill Gates: Climate Change Crisis Averted

Bill Gates: Climate Change Crisis Averted

by TheAdviserMagazine
October 29, 2025
0

Bill Gates is calling for a “strategic pivot” on climate change in a 17-page manifesto in which he declares that...

edit post
Trump says he expects to lower fentanyl-related tariffs on Beijing, discuss ‘farmers’

Trump says he expects to lower fentanyl-related tariffs on Beijing, discuss ‘farmers’

by TheAdviserMagazine
October 28, 2025
0

TOKYO, JAPAN - OCTOBER 27: U.S. President Donald Trump disembarks Air Force One as he arrives at Haneda Airport on...

edit post
‘The Stuff of Nightmares’: Hurricane Melissa Makes Catastrophic Landfall in Jamaica

‘The Stuff of Nightmares’: Hurricane Melissa Makes Catastrophic Landfall in Jamaica

by TheAdviserMagazine
October 28, 2025
0

Conor here: Just to add a few more observations to the ones below: A wind gust of 252 mph was...

Next Post
edit post
Why Risk Tolerance Questionnaires Can Be Powerful For Prospects (Not Just Clients)

Why Risk Tolerance Questionnaires Can Be Powerful For Prospects (Not Just Clients)

edit post
Breakout Stocks: How to trade Laurus Labs, Torrent Pharma and Fortis Healthcare that hit a fresh 52-week high? – ​Market summary

Breakout Stocks: How to trade Laurus Labs, Torrent Pharma and Fortis Healthcare that hit a fresh 52-week high? - ​Market summary

  • Trending
  • Comments
  • Latest
edit post
77-year-old popular furniture retailer closes store locations

77-year-old popular furniture retailer closes store locations

October 18, 2025
edit post
Pennsylvania House of Representatives Rejects Update to Child Custody Laws

Pennsylvania House of Representatives Rejects Update to Child Custody Laws

October 7, 2025
edit post
What to Do When a Loved One Dies in North Carolina

What to Do When a Loved One Dies in North Carolina

October 8, 2025
edit post
Another Violent Outburst – Democrats Inciting Civil Unrest

Another Violent Outburst – Democrats Inciting Civil Unrest

October 24, 2025
edit post
Probate vs. Non-Probate Assets: What’s the Difference?

Probate vs. Non-Probate Assets: What’s the Difference?

October 17, 2025
edit post
California Attorney Pleads Guilty For Role In 2M Ponzi Scheme

California Attorney Pleads Guilty For Role In $912M Ponzi Scheme

October 15, 2025
edit post
The Fastest Way to Accumulate the Greatest Amount of Wealth

The Fastest Way to Accumulate the Greatest Amount of Wealth

0
edit post
Coca-Cola Stock Is Already A Great Income Stock. Here’s How To Make It Better.

Coca-Cola Stock Is Already A Great Income Stock. Here’s How To Make It Better.

0
edit post
Jean Chatzky Warns That Emotional Loyalty Can Derail Retirement Planning as 85% of Americans Admit They Would Risk Financial Security to Help Family

Jean Chatzky Warns That Emotional Loyalty Can Derail Retirement Planning as 85% of Americans Admit They Would Risk Financial Security to Help Family

0
edit post
How to Build a Landing Page That Converts (With Clear Examples)

How to Build a Landing Page That Converts (With Clear Examples)

0
edit post
30 Days That Changed My Business: The Net-30 Lesson

30 Days That Changed My Business: The Net-30 Lesson

0
edit post
2026 Retail Predictions: A Flight To Profitability 

2026 Retail Predictions: A Flight To Profitability 

0
edit post
Coca-Cola Stock Is Already A Great Income Stock. Here’s How To Make It Better.

Coca-Cola Stock Is Already A Great Income Stock. Here’s How To Make It Better.

October 29, 2025
edit post
Jean Chatzky Warns That Emotional Loyalty Can Derail Retirement Planning as 85% of Americans Admit They Would Risk Financial Security to Help Family

Jean Chatzky Warns That Emotional Loyalty Can Derail Retirement Planning as 85% of Americans Admit They Would Risk Financial Security to Help Family

October 29, 2025
edit post
Oasis CEO uses AI to create financial plans, stock analyses

Oasis CEO uses AI to create financial plans, stock analyses

October 29, 2025
edit post
Quess Corp Q2 Results: Revenue up 3%, headcount rises by 21,000

Quess Corp Q2 Results: Revenue up 3%, headcount rises by 21,000

October 29, 2025
edit post
2026 Retail Predictions: A Flight To Profitability 

2026 Retail Predictions: A Flight To Profitability 

October 29, 2025
edit post
How to Save for a Luxury Car: A Step-by-Step Investment Plan

How to Save for a Luxury Car: A Step-by-Step Investment Plan

October 29, 2025
The Adviser Magazine

The first and only national digital and print magazine that connects individuals, families, and businesses to Fee-Only financial advisers, accountants, attorneys and college guidance counselors.

CATEGORIES

  • 401k Plans
  • Business
  • College
  • Cryptocurrency
  • Economy
  • Estate Plans
  • Financial Planning
  • Investing
  • IRS & Taxes
  • Legal
  • Market Analysis
  • Markets
  • Medicare
  • Money
  • Personal Finance
  • Social Security
  • Startups
  • Stock Market
  • Trading

LATEST UPDATES

  • Coca-Cola Stock Is Already A Great Income Stock. Here’s How To Make It Better.
  • Jean Chatzky Warns That Emotional Loyalty Can Derail Retirement Planning as 85% of Americans Admit They Would Risk Financial Security to Help Family
  • Oasis CEO uses AI to create financial plans, stock analyses
  • Our Great Privacy Policy
  • Terms of Use, Legal Notices & Disclosures
  • Contact us
  • About Us

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.