Data, Data Every Where/Nor any Drop to Drink: Making Sense of the Economic Data Deluge

In his lengthy 1798 poem “The Rime of the Ancient Mariner,” Samuel Taylor Coleridge tells the story of a group of sailors stranded at sea, surrounded by salt water they cannot drink and writing, “Water, water everywhere, nor any drop to drink.”

This famous line also seemed like an apt metaphor for the deluge of economic data which is now routinely released on a regular basis by a variety of government and private sources. In other words, how can you trust what you ingest?

It’s a fair question.  Over the last decade, as the number of traditional newsroom jobs has been cut by nearly half, Americans increasingly get their news from social media, television, Web sites and talk radio.  Since most of these sources are now oriented towards maximizing clicks, eyeballs and ears, even traditional economic updates are sometimes subject to spin versus true objectivity. Another issue is the sheer volume of economic data sliced and diced for different stakeholders, demographics and geographies.

For a simple way to ensure you don’t miss out on important economic news, the current edition of the free BuilderBytes e-newsletter by Peninsula Publishing regularly tracks 60 or more economic indicators each month. These are almost all national in scope, provide a link to the original source, and are generally relevant in some way to the housing industry.  The newsletter also features scores of other stories with links on finance, green building, design, affordable housing and more.

If you require a more detailed analysis, there’s certainly no shortage of relatively affordable, ‘data buffet’ services offering a smorgasbord of economic data at the national level.  But, much like a food smorgasbord, you still need to invest the time to locate, sample and collect the data that you want.  These data buffets also generally lack data at smaller geographic levels including MSAs, counties and cities.

Once you’re focused on the MSA, county or city level, the data search becomes more difficult or even proprietary in nature, which is why subscriptions can be pricey and custom reports produced by consultants or economists can easily run into thousands of dollars.  But in today’s connected world, the alternatives to these options have never been more numerous.

For example, if you want to review housing trends for a market you’re thinking of entering, Web sites for Zillow, Trulia, Redfin and various Associations of Realtors® offer everything from sales and inventory to market health and new home absorption rates.  If you want to review the local job market, government sources can usually tell you everything from job growth and unemployment applications to labor participation rates and median wages by industry.

If you’re looking for an overview of regional economic conditions, many of the 12 Federal Reserve Banks release their own monthly summaries and surveys covering their assigned areas, often including individual states and MSAs.  Some of these surveys, such as those done by the banks in New York and Philadelphia, are economic bellwethers closely monitored by Wall Street.

If you want to target hot new submarkets for future growth, government sources can tell you where population growth is outpacing building permits or where retail sales are suddenly surging.  For commercial real estate markets, many large brokerages maintain their own research departments, tracking everything at the submarket level from monthly rents to vacancy rates.

In other words, while you may have to pay an expert sleuth for finding, curating and analyzing data, you don’t necessarily have to pay for the data itself.

Still, many private sources do act as a check on official government indicators. For example, payroll processor ADP releases its own estimate of private sector job growth in advance of official government statistics, and both Gallup and The Conference Board regularly track monthly employment trends, employee engagement and the number of job vacancies advertised online.

For the housing market, the NAHB, NAR and MBA maintain regular updates on not just mortgage applications, home sales and prices, but also builder, seller and buyer sentiment. 

We are very lucky in the United States to have governments at the national and state levels which are very serious about collecting sophisticated data at various geographic levels.  This is certainly not the case in most of the world.

But much of this data, especially collected by the Census Bureau and elsewhere at the Department of Commerce, is under threat due to budget cuts, so it’s important for stakeholders to let their representatives know how crucial this data is for the business of building homes.

Because if ingestible information is power, then so is success.