Larry Summers: I'm Feeling Lucky
Type "rubbish economist" into Google. Then hit "I'm Feeling Lucky"...
The INCOVENIENT TRUTH about statistics, as Al Gore would no doubt confess if you threatened to stop him flying, is they look backwards, not forwards - and not even quite to the present.
That's as true of last-quarter earnings as it is of GDP. You're left guessing what today's outcome will be, right up until it becomes historic and you can try to claim it as fact. Even "up-to-the-minute" inputs have to exclude the very minute we're in, and corduroy-patch models like Greg Mankiw at Harvard should know this. So too should his chum, the White House's own Larry Summers.
Yet Summers - formerly head of Bill Clinton's Treasury and also of Harvard University, before coming back as Obama's chief economic advisor - used a speech on Friday to highlight a statistic that suggests he's forgotten the basics of empirical research. (Previous gaffes already said he'd forgotten to use sound judgment in public.) Bundling himself into blind fortune's get-away car, he told the Peterson Institute for International Economics that it shows "the economic free-fall has ended."
What is this killer stat? "The number of people searching for the term 'economic depression' on Google is down to normal levels," he's quoted by Politico.com.
Hurray for Larry!
As you can see, searches for the term "economic depression" were apparently four times their typical level coming into 2009, as Summers noted at the start of the year.
The search-engine depression was greater still as Larry dusted off his Team America badge ahead of last November's election. But now, "The recent shift goes to show consumer confidence is higher," he claimed last week.
"If we were at the brink of catastrophe at the beginning of the year, we have walked some substantial distance back from the abyss."
Now, let's forget how absurd it might be to base an economic conclusion on the broad pattern of Google searches. Never mind that on Summers' logic, Led Zeppelin were never so popular as in late 2007...demand for food stamps is now in a secular bull market...and the campaign to "free viagra" - that famous political prisoner - hasn't been this hot since 2004.
No, the real trouble with Summers' thesis is that the data series has yet to end.
Ooops! Just look what's crept into the data since Larry last checked and the start of July entered Google's query results.
Yes, Summers' own comments helped push that spike higher, of course. Google Trends confirms it on a 30-day chart. But he was only adding on Friday to a clear new uptrend in people searching for the dread phrase. And besides, Obama's advisor is only driving us back to the abyss himself, back to the brink of catastrophe, if he really believes this marker counts for something.
Better leave that forced march to the Treasury and Fed instead.