“I want you to have expected it.”

July 17th, 2009

seven

“If John Doe’s head splits open and a UFO should fly out,
I want you to have expected it.”

That’s what Morgan Freeman’s character says to Brad Pitt’s character as they prepare for the climactic scene of the horror-cop movie Se7en.1 And that, in paraphrase, is my advice to you as you read the business news these days. We’ve been over this ground before.

Today’s offending story, from Bloomberg:

Housing Starts in U.S. Climb to Seven-Month High

Here’s how it opens:

Housing starts in the U.S. unexpectedly rose in June as construction of single-family dwellings jumped by the most since 2004, signaling the market is stabilizing.

Emphasis added, because “signaling the market is stabilizing” is more definitive that the data indicate and because I generally think “unexpectedly” is a cognitive Tar Baby in this economy — it looks cute at first, but then you find yourself all gummed up in the expectations.

Some caveats:

  • The Bloomberg story as a whole is nuanced, and laden with hard figures.
  • The “unexpectedly” refers to strong overperformance by U.S. housing starts against “the median of 73 forecasts in a Bloomberg News survey.” Fair enough.
  • The story offers caution on the “market is stabilizing” thesis, e.g. when it says “a strong rebound [is] ‘not likely for some time’,” and “The report ‘quite potentially is signaling the early stages of a rebound’.”

To reiterate my fundmental premise: Companies should be ready for ANYTHING in this economy.

If you’re thinking “Hey, things are picking up!” and you somehow need that to be true — for your business, for own sense of well-being — I urge you to rethink. Hey, maybe things are picking up. I’ll be the first to celebrate if they are. But . . . maybe they aren’t. Or maybe they are, but not for your industry. Or maybe they are, but more slowly than you would ever imagine.

You need to be making choices, for yourself and your company, that prepare you to take advantage if and when things do pick up . . . and that prepare you to weather lots more stormy weather first.

And you don’t need to get caught up in the game of expectations.

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Related:

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    1. Gwyneth Paltrow’s performance in that movie was totally underrated — not that I’ve watched it since I saw the movie in the theater in 1995. There’s only so much creepiness I can take. ↩
    Category: Economics

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    4 Comments so far

    Ann Newman July 19th, 2009 11:12 am

    Good stuff. Someone needs to point out the difference between slowing a hemorrhage and watching a scar fade. That said, so much depends on perception. So the question really goes backs to the banks. Once they can demonstrate real financial health and that loans for housing starts are solid, I think we should accentuate the positive wherever possible.

    Tim Walker July 20th, 2009 3:59 pm

    Thanks, Ann — love your hemorrhage/scar comparison!

    Believe it or not, a good thumbnail treatment of housing numbers in the press. -- Hoover’s Business Insight Zone July 29th, 2009 7:16 am

    [...] tour of my frustration with the misreporting of economic data in the business press, you might scan this, this, and [...]

    Listen to Paul McCord about doing business in this economy. -- Hoover’s Business Insight Zone September 11th, 2009 3:35 pm

    [...] “I want you to have expected it.” [...]

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