Hard data vs. soft data

Don’t be fooled by the false precision of hard data. The fact is, it’s all squishy. 

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Soft versus Hard Data
Welcome to the Know the Difference Minute for Thursday, September 7th.
In the second quarter, the U.S. economy, as measured by gross domestic product, grew by 2.1%. Technically, GDP increased 0.5% for the quarter, not 2.1%. Half a percent seems very small, so economists like to annualize it by asking what would happen if the economy grew at that rate for 12 months instead of 3.
Still, it was a good number.
Contrast that with the Federal Reserve’s collection of qualitative information from around the country released yesterday in its Beige Book. It was a more modest, if not beige-colored, assessment of the economy.
GDP is known as “hard data.” The Beige Book and other survey-based data are known as “soft data.” Don’t be fooled by the false precision of hard data. The fact is, it’s all squishy. It’s all based on samples and subject to revisions.
I’m Brian Jacobsen, Chief Economist at Annex Wealth Management. That is your Know the Difference Minute.