Astonishingly enough, not every utterance from an economist is something you can take to the bank. After all, it was John Kenneth Galbraith who pointed out that the only function of economic forecasting is to make astrology look respectable. 

What is an electrical contractor to do when five economists get in a room and offer five different opinions (six, if one is from Harvard)? The easy answer is to believe only me, but it is more complex than that. It requires the consumer of all this information to sift through the welter of opinions and focus on the relevant facts, which is far easier said than done. What follows is a guide of sorts—what to pay attention to and what to essentially dismiss as irrelevant or even manipulative.

Data smarts

The first step is to separate out the data that really matters to you and your business. Granted, the world of an electrical contractor is pretty broad, as virtually every sector of the economy is affected by the work you do, but there are still ways to limit. If you don’t do work in California or New Jersey, do their issues really matter to you? The United States is a large country with a huge economy—a GDP of nearly $30 trillion. At any given moment there is a part of the country in recession and another booming with growth. It hardly helps to know national numbers when business drivers remain local or regional. The challenge is that this local data is harder to find and requires some digging.

Select and sort

The second step is to recognize that people can be very selective in their use of data. This is especially the case with politicians. The party in power wants to paint a rosy picture and take credit for that outlook. The party out of power wants to paint a picture of gloom and doom and to blame the party in power. Once upon a time, I taught out of a book called “How to Lie With Statistics” by Darrell Huff. It showed how easy it was to manipulate stats to make any point one wants. It also makes one deeply suspicious of data that has clearly been manipulated. If you listen to the current crop of talking heads, there is a lot of discussion about an imminent recession. While some indicators are certainly not trending as we would like, many others are suggesting the current situation is far from desperate.

The third quarter GDP numbers are at 3.9%, according to the GDPNow data from the Atlanta Fed—almost a point and a half higher than our 20-year average. The unemployment rate is still at record lows at –4.3%. 

The bigger issue, as far as employment is concerned, is a labor shortage. Nearly every electrical contractor I speak with states they would hire a qualified person on the spot. The quit rate revealed by the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) is at 1.9%, and that is unusually high. It suggests people are so confident in their job prospects they are willing to simply quit and go looking. 

Meanwhile, the rate of inflation has been escalating, but is still at 2.9%, which is not all that far from the rate the Fed prefers (2.0%). Inflation is often categorized as “creeping“ (under 3.0%), “walking” (between 3.0% and 10%), “galloping” (more than 10% annually) and “hyperinflation” (50% per month). We are still in the creeping category. 

The bottom line is that the economy as a whole has been performing better than many had expected. Retail has been surging as upper-income earners continue to spend. Manufacturing is growing above the 20-year trend line, and the data that Armada, my company, presents monthly shows significant gains in electrical equipment and appliances.

Turn a skeptical eye

The third step in sorting out the noise is to remain skeptical and consider the source. There are many ways to motivate people to do or not do something. Does the data come from a source with an agenda of some kind? Consider some of the tricks in retail. Your are told something is in short supply so you feel compelled to “act now.” In truth, there is no shortage. Rumors drive the markets on a daily basis and the vast majority of these rumors are later proven inaccurate. Sorting through all these claims can be exhausting. How do you know if you really need to act urgently? 

Trust, but verify

The fourth step is the easiest and hardest of them all to adhere to. Unless you are willing to invest considerable time and effort examining data and claims to prove their accuracy, there has to be a simpler system. There is—it is called trust. You find a data source you can believe or a person you know is not trying to manipulate you, and you trust the information they provide. 

The challenge is that these sources and people are not easy to find. Frankly, this is why you engage with this magazine—it is a trusted source. Its agenda is making its readers successful, and the editors essentially do the sorting for you. There are obviously others that earn your trust—long-time suppliers and customers you have worked with for years. They have earned that trust over time. There are also the colleagues you interact with. To be honest, I rely on the contacts I make with groups like this industry so you can tell me when my data doesn’t match your reality.

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