Always Look Under the Hood

| Mon Dec. 15, 2008 2:17 PM EST

ALWAYS LOOK UNDER THE HOOD....Some good advice from Dean Baker. When a news article tells you that industrial production fell "less than expected," check to see if that's only because the previous month's numbers have been revised downward:

There are often large revisions to prior months' data. A large fall from an upward revision can leave us in a much better place than a small fall from a downward revision. If the new information in the report is that things were much worse last month than we had thought, we have limited grounds to celebrate when we say that they have not worsened too much further in the current month.

The data show that November's manufacturing output is down 1.4 percent from October's level, which was in turn revised down by 0.5 percent from the previously reported level. Over the last three months, manufacturing output has fallen at a 17.8 percent annual rate. That is not good news.

No, it sure doesn't sound like good news to me. On the other hand, if we let GM go under we'll all be pining away for the days of a mere 17.8% decline.