Amazon’s Bad Omen for the U.S. Economy
Besides the fact that Libertarian nitwit and would-be public intellectual McArdle is taking a single datapoint and making a trend announcement out of it (Amazon did not make the numbers she expected and therefore the economy is tanking), there is this little gem of logic:
That’s not just disappointing for Amazon; it’s also not great news for the U.S. economy. When retail foot traffic and sales were disappointing in December, the standard explanation was that people must be moving their purchases online. Obviously, they weren’t — at least, not nearly as much as analysts expected. Given how dominant Amazon is in e-commerce, this should cause most of us to revise our expectations of fourth-quarter retail sales, as well as growth in gross domestic product. And not in a good direction.
“When retail foot traffic and sales were disappointing in December, the standard explanation was that people must be moving their purchases online,” because spending is a constant? Because why? Is the world really a zero-sum, closed system?
Or could it be because analysts were wrong?
Anyway, because analysts were wrong, Amazon stock is now plunging. In what way does this make sense? This week Apple had a huge announcement, the best quarter ever, but analysts had expected more and now Apple stock is lower and the usual suspects are talking about how Apple is doomed.
Economists have tried to declare their studies a science, with cause/effect and predictable outcomes. The whole worship of the Invisible Hand is based upon the belief that markets act rationally. They don’t. People’s economic conditions are fluid, not rational, and they make buy/not buy decisions based upon their own needs and wants. There is no predictive behavior, and to the extent that one can analyze markets at all it is only in hindsight.