Monday, March 17, 2008

The Distance From Macro to Me & You

I'm not sure yet how this idea evolves. But I am increasingly suspicious of the relevance of macro information to me as an individual. The media report daily on the minutia of financial indications and reports which might shed light on the overarching question of whether the U.S. economy is in a recession. Through it all, I what? If I am told that the last two quarters of economic data dispositively indicate a recession, it's not as if my salary will be changed. If six weeks later the economic data is revised and the label, recession, is removed, will I ever feel the difference?

The macro and the micro may well be connected. But how long and tortured a path is it from the one to the other - and how many butterfly effect/tipping point branches are there from my micro to yours? The relevance of these questions isn't restricted to economics, of course. But that does seem to be getting the most airplay on the news.

By the way, the weatherman said that there is a 52.3% chance of rain in the United States today. Remember your umbrella.