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Paul Krugman on How Statistics Lie

 Paul Krugman made an insightful point on his New York Times blog (see krugman.blogs.nytimes.com/). The surprise 17% improvement in new housing starts for May, which many heralded as a bonafide green shoot, is not what it seems. Sure, 17% is a nice number, but we’re coming off such a low base the number is meaningless. 17% ain’t what it used to be. It’s like General Motors (GXM) (note new ticker symbol) going from $2 to $3. Sure, it’s a 50% move, but it doesn’t mean the bankrupt company is back in the pink of health. You could use the same argument for the 40% move in the S&P500. Since virtually all of our economic data is recovering from once a century extremes, they will have to be viewed with many grains of salt. When you meet Paul in person he is a pussycat, but in print is he Freddy Kruger meets Jack the Ripper.