Doom and Gloom Makes Preemptive Strike on Christmas

It is a holiday tradition in American media to forecast poor Christmas sales. If it turns out sales aren't as slow as predicted, you can expect reports that shoppers are "only buying bargains" because "money is tight for shoppers this year." 2007 is no exception and is rather notable for the attempts of negative prognosticators to cling to their dire predictions even in the face of positive news. 

Even before Thanksgiving, news media such as the Boston Herald reported that, "The list of reasons why this year’s holiday season stands to be a tough one for retailers could be lengthier than most people’s shopping lists." ABC Channel 7 let us know that, "Despite the hoopla of an early start to the season, the holiday cheer's missing at retail stores." UC Berkeley Professor Bob Edelstein informed reporters that a slow holiday shopping season could have far-reaching consequences.

Black Friday finally came and it was grudgingly reported the next day that shoppers had come out in droves. The Washington Post quoted John Ford of Sears Holdings as saying that,"It exceeded our expectations. We had more customers at opening yesterday than we had in prior years, ... it was 50 to 100 percent higher than it was in previous years." Did the increased traffic change the prognostications? "I don't think so," said Candace Corlett a principal with WSL Strategic Retail and apparently professional doom-sayer. According to Corlett, shoppers were out looking but probably not buying. "It's become more of a shopping sport," Corlett said.

Five days after Black Friday, when more data could be collected, ShopperTrak RCT Corp., estimated Black Friday sales this year rose 8.3% from 2006 to $10.3 billion, aka "strong sales." Still, the doom sayers did not give up. Dow Jones warned that, "last year, retailers had a good start during the Thanksgiving weekend, but many stores struggled in December, and a shopping surge just before and after Christmas wasn't enough to make up for lost sales." Before you wonder if Dow Jones has good point, keep in mind that Christmas shopping in 2006 was a healthy 4.6% better than the prior year.

We are now officially one week into the Christmas shopping season. According to ShopperTrak, data for the Thanksgiving weekend, not just Black Friday, shows retail sales at a strong 6.5% over 2006. Have the doom sayers relented?  Of course not.  Instead they have resorted to the "shoppers are only buying bargains this year" argument. "The numbers don't tell the whole story," claims Peter Morici, an economics professor at the University of Maryland, "Retailers are trying to put a positive spin on things. People are very pessimistic about what things will be like this winter. ... they're buying less expensive items. So it all fits together. It indicates a slowing economy."

According to the Dow Jones newswire, the National Retail Federation forecasts a 4% rise in holiday sales from a year ago, the smallest gain in five years. In truth, despite being "the weakest in five years," 4% growth isn't bad. If holiday sales outpace economic growth it means that consumers are either going into debt or they are cannabalizing consumption from other parts of the year. Nobody should be disappointed in 4% annual growth. However, based on the data collected so far, I am going to take the over and forecast that holiday sales will exceed the forecast 4% increase over last year.

3rd Qtr 2007: A Doom and Gloom Case Study

Surprise. The latest statistics show that the United States economy grew at an annualized 4.9% in the 3rd quarter of 2007.  You would have never guessed it from the tone of the media.  During the 3rd quarter of 2007 the media maintained its steady drizzle of reporting on how bad things were getting.  I took some time to capture some of the doom and gloom.

In early August, Reuters lets us know that, "Blue chips end lower as subprime worries lag" From the article's first paragraph:

"U.S. blue-chip stocks fell on Friday, capping a week of wild swings, as losses related to subprime debt loomed amid attempts by the Federal Reserve to dispel anxiety about the financial system's stability."

Yes friends, we were told things were getting dark. The Federal Reserve was trying to dispel fears that the financial system was no longer stable, but to no avail, the markets declined anyway. Thank you, Reuters.

USA Today, America's most read newspaper, reported in September that, "Job losses, recession fears hammer stocks; Dow sheds 250" According to USA Today:

"The culprit was the August jobs report, which startled investors because it unexpectedly fell for the first time since 2003. That raises anxiety that the mortgage/housing/credit mess has spread to the broader economy despite claims to the contrary from many corners of Wall Street and Washington."

Darn those "many corners of Wall Street and Washington," they are not being straight with us! Of course, USA Today later reported that the August jobs report was revised upwards to the reflect the creation of 89,000 jobs in that month. For some reason this rather positive news was reported under the inexplicably negative headline, "Treasurys plunge after jobs data"

If you have a good example of 3rd quarter doom and gloom. Drop a link in the comments below.

It's Always Doom and Gloom in the Media

It has been said that economists have successfully predicted 8 of the last 2 recessions. Surely the mainstream media has an even worse record.  Financial reporting in the American media is a tedious and unrelenting drizzle about the next recession allegedly lurking just around the corner. These articles are usually supported by a survey showing falling consumer sentiment, a smattering of data on whatever indicators in the economy are not completely bullish, and prognostications from economists who foresee an economic slowdown. Since it is unlikely that the economy will never have a recession, they will eventually be correct.  Whether they are genuinely prescient is another matter.   Even a broken clock is right twice a day.   The interesting thing is that recession is constantly predicted in the face of consistent and pervasive economic growth.  An economy is generally considered in  recession if the gross domestic product (GDP) is declining.  I created the graph below with data from the Economic History Services showing the annual GDP of the United States since 1980.

United States Annual GDP Since 1980

As you can see, recessions have been rare over the last quarter century relative to economic growth, with the gross domestic product of the United States more than doubling over that time period from just over 5 trillion USD to almost 12 trillion per annum.  Yet the doom sayers persist unashamed.

A Quick Economics Quiz

Flowers: Yet another "Big Bang."

Charles Darwin called the evolution of flowering plants an "abominable mystery." Recent research has shown that flowering plants suddenly appeared in yet another "big bang" for evolution. A recent press release published at ScienceDaily, reports as follows:

Doug and Pam Soltis, a UF professor of botany and curator at UF's Florida Museum of Natural History, respectively, also showed that a stunning diversification of flowering plants they are referring to as the "Big Bang" took place in the comparatively short period of less than 5 million years -- and resulted in all five major lineages of flowering plants that exist today.
"Flowering plants today comprise around 400,000 species," said Pam Soltis. "So to think that the burst that give rise to almost all of these plants occurred in less than 5 million years is pretty amazing -- especially when you consider that flowering plants as a group have been around for at least 130 million years.[emphasis mine]

I should point out that it is also possible that flowers appeared in a much smaller time frame but the resolution of the fossil record is only able to narrow it to 5 million years. However, in evolutionary years, 5 million years is plenty quick.

The press release has more to say.

Jansen and his UT Austin colleagues analyzed DNA sequences of 81 genes from the chloroplast genome of 64 plant species, while the UF researchers analyzed 61 genes from 45 species. The two groups also performed a combined analysis, which produced evolutionary trees that included all the major groups of flowering plants.
The analyses also confirmed that a unique species of plant called Amborella, found only on the Pacific island of New Caledonia, represents the earliest diverging lineage of flowering plants.
By laboriously arranging the sequences, the researchers slowly built a kind of family tree for plants -- a diagram of relationships among plant lineages showing diversification over the eons. Based on known rates of genetic change double-checked against fossils of known ages, they established a time scale that revealed the dates of major branching events.

This should be taken with a healthy dose of skepticism. Phylogenetic trees are based on the assumption that such a tree exists to begin with. Different genes often yield "alternative conflicting phylogenies." (Carroll & Rokas)

Can we realistically hope to resolve diversification events spanning a few or even tens of millions of years that occurred in deep time? It is widely accepted that nucleotide data are of limited use for resolving deep divergences because of mutational saturation and homoplasy. Until the recent expansion in available data, it has not been possible to fully explore what the limits of the protein record might be. Like others in the field, we also had expectations that scaling up dataset size would be sufficient to resolve interesting groups. The evidence presented here suggests that large amounts of conventional characters will not always suffice, even if analyzed by state-of-the-art methodology. Just as it would be futile to use radioisotopes with modest half lives to date ancient rocks, it appears unrealistic to expect conventional linear, homoplasy-sensitive sequences to reliably resolve series of events that transpired in a small fraction of deep time. (Carroll and Rokas) [emphasis mine]

Yet this recent research purposes to do exactly that, resolve a series of events that transpired in a small fraction of deep time. What's more they do it by only examining the chloroplast genome, increasing the subjectivity of the excercise. The press release continues:

By laboriously arranging the sequences, the researchers slowly built a kind of family tree for plants -- a diagram of relationships among plant lineages showing diversification over the eons. Based on known rates of genetic change double-checked against fossils of known ages, they established a time scale that revealed the dates of major branching events.

So now molecular clocks are thrown into the mix to establish the times of the already suspect divergences. Is that accurate? Not really. Molecular clocks are mostly based upon circular logic and are often wildley subjective, as a recent peer review article entitled "Dates from the molecular clock: how wrong can we be?" by Mário J.F. Pulquério and Richard A. Nichols explains

Large discrepancies have been found in dates of evolutionary events obtained using the molecular clock. Twofold differences have been reported between the dates estimated from molecular data and those from the fossil record; furthermore, different molecular methods can give dates that differ 20-fold. New software attempts to incorporate appropriate allowances for this uncertainty into the calculation of the accuracy of date estimates. Here, we propose that these innovations represent welcome progress towards obtaining reliable dates from the molecular clock, but warn that they are currently unproven, given that the causes and pattern of the discrepancies are the subject of ongoing research. ... We currently do not know enough to be confident in the prospects of these new methods, and some initial results are discouraging.

What is really interesting about the research, and why I post it here, is that points out how poorly Darwinism is able to explain the "abominable mystery" of flowers. There is really no clue as to how are why such beautiful variety could appear so quickly. The press release explains:

The latest research clears the picture by showing that all plants fall into five major lineages that developed over the relatively short period of 5 million years, or possibly even less.

As for the diversification's cause, it remains mysterious, Pam and Doug Soltis said.[emphasis mine]