Point of View

We all know that some people are optimists and some people are pessimists. I like to think of myself as a realist but I've been told by many people that I'm one of the most optimistic people they know so I should probably accept that. It is likely that all the optimists and pessimists are convinced that they are realists and are unaware of the bias they bring to the table.



In looking at economic data the opportunity for this bias to come out is extraordinary. Take oil prices. When they were down a few months ago, it was viewed by many (pessimists) that it demonstrated the terrible state of the economy and lack of activity and was just about the worst thing in the world. Recently oil prices have gone up (in the spring much like they almost always do) and the same people are saying it is the result of the trillions of dollars we printed and that rampant inflation is going to destroy the recovery, which was never a real improvement anyways, just a pretend one.


Now the price of a barrel of oil is almost exactly what it was three years ago. Of course you have to acknowledge that three years ago the economy was much better than it is now. However, The supply of oil vs the demand for oil is what determines prices. While demand is down there have also been production cuts. Hard to determine the impact of inflation in all this.

A third way to look at the price of oil would be to say it shows that the economy is improving, usage is up, people are driving more and it signifies that the worst is past.

So a single event, such as the change in the price of oil, can be interpreted in many ways depending on your point of view.