"Kee" Points with Jim Kee, Ph.D.

It seems as though my view that economic growth in the U.S. will be stronger in 2013 than 2012, particularly after the first quarter, is not really unique among strategists. Nevertheless, I think that’s what an objective view of the drivers of growth suggests, and that is why I decided to spend most of my time on our upcoming quarterly webcast covering the U.S. economy. Other consistent views from the more proprietary research houses are that Europe will probably strengthen some in the second half, albeit with resurgent unrest as austerity measures go into effect, and that China’s growth will accelerate in 2013. As Kee Points readers know, I’m less concerned about the upcoming debt ceiling debate than the headlines, in part because we just went through this in 2011. That ended in the Budget Control Act of 2011, which was signed in August (2011) by President Obama. Going into that period it was believed by some that markets might favor a contentious debt ceiling debate. Clearly that wasn’t the case, and the fear, market sell-off, and overall disruption that ensued minimizes, in my opinion, the likelihood of a repeat. Neither the public nor the politicians have the stomach for it and, more importantly, we know now – what we didn’t know then – how a lack of compromise will play out.


I have also mentioned in prior notes the differences between the press, (which is geared towards generating headlines), and proprietary research, (which is geared towards generating insight). There’s a similar dichotomy that occurs even among Nobel Prize winning economists when they are writing in peer-reviewed journals versus non-peer reviewed public press venues. Since I get asked a lot about pieces written in the press by Nobel Prize winning economists, I thought you might find the following helpful: An economist publishing a piece for fellow economists goes through a pretty strict review process, usually with numerous “revise and re-submit” requests made by journal editors. A good piece will take years to publish – at least nine out of ten are ultimately rejected. But an economist writing in the popular press faces no such constraints. The late George Stigler, one of my favorite economists (Nobel 1982), made a point of highlighting this in his memoirs:


“However, if the economist writes for the New York Times, the Wall Street Journal, Harper’s, or the Atlantic, or Penthouse or Playboy [alluding to a famous Milton Friedman interview], the quality standards are not imposed by fellow professionals. Instead, the standards of professional journalism are imposed: They include better writing and a deep, insatiable infatuation with controversy.”


I guess my point is that, just as proprietary Wall Street research is nowhere near as extreme as day-to-day mainstream media, so also economists are nowhere near as extreme in peer-reviewed outlets as they are when they appear in the popular press.