Economic Measurement Issues Arising from Globalization

3 Economic Misconceptions That Need to Die

It was the memo heard around the world: In late February, when Yahoo CEO Marissa Mayer ordered the company's staffers to stop working from home, she set off a ferocious debate over workplace productivity. "Speed and quality are often sacrificed when we work from home," wrote the company's human resources chief in a leaked memo implying that telecommuting employees were less productive than those in the office.

Lately, when it comes to obtaining an accurate sense of the true state of the US economy, it is as difficult if not more than analyzing the openly-manipulated Chinese data. On one hand, the Fed-juiced market, which has lost its discounting powers, no longer reflects the current or future economic (or corporate) fundamentals, on the other, massive seasonal aberrations, whether purposeful or accidental, have made a mockery of any data series, be it jobs, manufacturing, retail sales, or housing.

Not like a market test was needed, but in a time when bad news is great for stocks, we fully expected today's Non-Mfg ISM consensus beat to be great-er for the several hot potato passing algos still trading. Sure enough, the February non-manufacturing ISM just printed at 56.0, higher than the 55.0 expected, up from the 55.2 in February and the 8th beat of expectations in a row.

The largest manufacturing countries are China, USA, Japan and then Germany. These 4 are far in the lead, and very firmly in their positions. Only the USA and China are close, and the momentum of China is likely moving it quickly ahead – even with their current struggles.

Every day we consciously buy products whose performance depends on one or more measured quantities — the wattage and lumens of light bulbs, that 12-ounce cup of coffee, the fill up at the gas station. Many of us take for granted that we are getting our money’s worth, and in large part we are, because the accuracy of these measurements traces back to calibrations and standards from the Department of Commerce’s National Institute of Standards and Technology (NIST).  But measurement and other precise specifications also play a much broader, largely invisible economic role. All the sophisticated technologies we depend on daily require equally sophisticated measurement capabilities to ensure performance, quality, and safety. The diameters of optical fibers as thin human hair must match up perfectly to carry telecommunications data and video over thousands of miles. CAT scan machines must deliver the minimum X-ray dose for clear images while protecting patients from unnecessary radiation. The frequencies of cell phone systems must be finely tuned so that you receive clear reception of your calls, and only your calls, without crosstalk from stray signals. Moreover, virtually every product or service one buys today is a complex technology system (computers, automobiles, even clothes washers). The components of these “systems” can only work together if the physical and functional dimensions of the interfaces between them are precisely specified. NIST provides the precision measurement and interoperability tools industry needs now while pushing the boundaries of the underlying science to create the enabling infrastructure for the technologies of tomorrow.

In previous posts I have shown data for global manufacturing output by country. One of the things those posts have showed is that manufacturing output in China is growing tremendously, but it is also growing in the United States. The chart below shows manufacturing production by country as a percent of GDP.