Cautionary Notes to Avoid Rookie Economist Errors, Revised Edition:

As I’m teaching econometrics, I’m adding in handling-of-data issues. Examples from the last three years.

Don’t smear data sources without understanding the data

EJ Antoni: Back to Smearing Data Sources

Don’t argue that the data haven’t exhibited something for a hundred years, when a hundred years of the data don’t exist.

The Availability of Quarterly GDP Data for the US: Memo to EJ Antoni

Don’t assert the data series don’t exist when they do indeed exist:

EJ Antoni: “factor in the millions of people missing from the labor market (don’t have jobs but are excluded from official unemployment calculation)”

Understand what your deflators do — and do not — include before making inferences (tariff pass through edition).

EJ Antoni on the No Tariff Pass Through Thesis

Don’t assert the existence of a vast conspiracy, when simple statistical sampling error could explain results (not that conspiracies don’t exist: just think “Epstein”).

EJ Antoni/Heritage Foundation: “some suspect government statisticians are committing lies of omission.”

 

Don’t make unsubstantiated assertions that are countered by the bulk of peer reviewed studies.

 

Heritage Foundation Chief Economist: “Factors such as changes in exchange rates mean that foreign producers typically end up paying some (or most) of a tariff.”

Don’t use month/month growth comparisons when the data are noisy:

Heritage Chief Economist Interprets Biden vs. Trump Employment Trends

When trying to characterize a phenomenon (e.g., inflation), do not rely on one, largely undocumented, data series:

Truflation Chief Economist: “Less Than 1 Percent Inflation? Yes.”

Don’t assert the only definition of a recession is two consecutive quarters of negative GDP growth:

Why Friends Don’t Let Friends Define Recessions as Two Consecutive Quarters of Negative GDP Growth

Report regression statistics (e.g., R-squareds) if you’re going to cite regression results.

EJ Antoni Tries to Estimate Crowding Out using 2SLS

Keep track of what units your variables are measured in, including when running regressions.

Is the Sensitivity of Muni Bond Rates to 10 Year Treasury 0.04?

If you are reporting provocative empirical results, document your data and data series construction.

“The Recession of 2025 Will Be Backdated” to 2022

 

The second edition of rookie economist errors.

Yet more errors:

Don’t dismiss seasonality.

Don’t be casual about estimated trends.

Don’t make policy analysis based on not-statistically-significant parameters.

Don’t forget that just because somebody calls something a “competitiveness index” doesn’t mean it actually measures competitiveness.

 

5 thoughts on “Cautionary Notes to Avoid Rookie Economist Errors, Revised Edition:

  1. Macroduck

    About those millions of people “missing” from the labor market…

    https://fred.stlouisfed.org/graph/?g=1SpHw

    The prime-age employment-to-population ratio has been steady for some time near the highest level since the dot.com boom. Anyone “missing” from the prime-age labor force must also be missing from the population. How would that have happened?*

    The only sign of “missing” workers is the decline in the total employment-to-population ratio, which reflects the aging of the population: retirees are becoming a larger art of the population. Oh, and by the way, if Congress weren’t so busy covering up the misdeeds of the felon-in-chief, maybe they could do something about the coming Social Security shortfall.

    *Anyone really interested in knowing how many “persons” there are in the U.S. population, and anything about population dynamics, would want the Census Bureau to do its job without political manipulation. Luckily, the felon will be out of office (back in court?) by the time the next census rolls around.

  2. Macroduck

    Off topic – There seem to be two conflicting stories right now about the odds of the U.S. attacking Iran. One is that the Mad King has taken heed of warnings that Iran will be a tough slog in an actual war:

    https://www.nytimes.com/2026/02/22/us/politics/trump-iran-strike-attack.html?unlocked_article_code=1.OFA.fLZY.ewv7aeDQTpxF

    The story has it that, despite this trepidation, the Mad King still wants to attack and is considering two separate episodes, one now and a more prolonged attack in the future if the first one fails – whatever “fails” means here.

    The other story hinges on a hockey game. This trip didn’t happen:

    https://www.yahoo.com/news/articles/italian-media-trump-may-watch-144338280.html

    That decision to stay in DC has stirred up talk about an immediate strike:

    https://larrycjohnson.substack.com/p/donald-trumps-problems-in-the-middle

    This is the “moonlight dictates attack timing” story that Johnson has been pushing; gotta go now or wait for the next moonless night a month from now.

    A further round of talks with Iran is set for Thursday:

    https://fortune.com/2026/02/22/us-iran-nuclear-talks-next-round-geneva-trump-military-buildup-mideast/

    As I recall, high-level talks were scheduled around the time the 12-day war started, so if history rhymes…

  3. Macroduck

    Aming the issues not addressed by the Supreme Court’s decision to reject the Mad King’s power to impose tariffs under IEEPA is what to do about tariffs already paid. An obvious reason not to address that issue is that the Mad King’s Justice Department had already promised, in court, to repay any tariffs collected illegally. Treasury Secretary Besent has also said in public that those tariffs payments would be refunded, though it might take a year. Now? Just kidding. We don’t want to:

    https://www.wsj.com/opinion/a-government-tariff-refund-bait-and-switch-a73a29a9

    ‘Cause the rule of law and stuff.

    Oddly, the Mad King seems to have missed the point that refunds paid out sufficiently early could stimulate the economy ahead of the November elections.

  4. Macroduck

    OK, one more off topic commeny – regular readers of the financial press will have noticed reports of stress in private finance. A few examples:

    https://www.ft.com/content/2d512944-43de-4902-a51c-084737e994bb

    https://seekingalpha.com/news/4555083-private-equity-returns-dip-for-fourth-straight-year-bain-co-says

    https://www.cnbc.com/2026/02/22/jim-cramer-looks-at-whether-private-equity-the-next-market-crisis.html

    There is another development in the private private fi a ce that, as far as I can tell, hasn’t been connected to the stress being reported, but should be. There is a lobbying effort underway to bring in retail investment money. Here’s a example:

    https://www.theglobeandmail.com/business/commentary/article-private-equity-investing-stocks-tsx-ipo/

    Recent listeners to Marketplace radio will have heard an ad encouraging investment in private credit -same thing.

    This effort to drag retail investors into private equity/credit is a symptom of the ill-health of private finance. Somebody has to hold the bag, and it ain’t gonna be the professional investors. The same thi g hap poll ened with hedge funds when their returns turned to mush. For more information in this transfer of risk and eventual loss from professional to retail investors, look up “Kansas City shuffle”.

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