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By notehound
November 23, 2009

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This weekend, I heard some startling commentary involving "statistics" from radio talk show hosts and TV talking heads. I'm too ignorant or too lazy (pick one) to do the necessary research to check their veracity, but here's what the listeners/viewers were told:

1. That unemployment will likely peak at about 10.8% during 2010 and hold in that range for a while, because:

2. Once employment starts picking up, a lot of those who have "given up" on looking for work (and therefore don't show up in the unemployment numbers any more) will come back into the seekers' job market and drive the unemployment numbers up again.

3. That despite announcements of cutting back on mortgage purchases, the Fed in fact will keep buying mortgage securities indefinitely in order to keep mortgage rates low until the real estate market turns around.

4. That only about 10% of Americans say their income increased during 2009, the lowest number since record keeping began (in the 1960's?).

5. That 36% of Americans say their income decreased during 2009, the highest number since record keeping began (in the 1960's?).

6. That a large proportion of Americans will be paying cash for their Christmas purchases, rather than putting them on credit cards, and therefore Christmas sales are likely to be subdued when compared with recent years.

7. That only 50% of females under 30 years old and only 33% of males under 30 years old are "financially independent of their parents" - both figures representing the lowest ratios of financial independence for said age groups since 1969.

I have no clue whether all or any of the above statistical, probability or trend representations are actually accurate. However, I believe that the mere dissemination of such statements via mass media can have an impact on human behavior - and can have political ramifications, too. Anyone who listens to the TV or radio is likely to think the economy is pretty sick.

Of course, we should be greedy when others are fearful and fearful when others are greedy.

So let's go buy some undervalued stocks and load up on corporate bonds, since an economic recovery is already underway and substantial earnings growth is just around the corner!