10.11.09

THE INTUITION OF SEASONAL ADJUSTMENT. Professor Munger.
One more shot at explanation: suppose the high temp in NC for each day in January stuck at 56 degrees. And suppose it stayed at 56 degrees for the daily high all through the summer. Would you say that the climate stayed the same? No, you would say that the climate cooled, dramatically, because you mentally "seasonally adjust" the numbers for ...well...seasons. Same with economics: what seems like good news in October is not good news because it takes great news in October to be good.
Game theory, or representative-agent macroeconomics, are comparatively less in the nature of art forms.

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