Felix Salmon

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Economic projections matter, because they are used to make real-world policy. Which is the second piece of bad news surrounding last week’s dismal jobs report – not just the horrible jobs numbers themselves, but also the fact that no economists expected them. Indeed, the economic consensus was for more than double the number of jobs actually created in May. Are the world’s policymakers buying into that all-too-cheery view of the economy?

Underestimating how bad things are, it turns out, has been something of a trend of late. Economists expected US factory orders to rise by 0.2%; in fact, they fell by 0.6%. More broadly, 18 of the 21 economic indicators released last week came in weaker than expected, per the folks at Bespoke Investment Group.

Does this matter? Calculated Risk points out – rightly – that economists’ missed projections don’t necessarily tell us anything other than how wrong economists tend to be. And John Mauldin notes that “the Blue Chip economics consensus has never forecast a recession. And they largely miss recoveries.” Here’s Mauldin’s chart:

Meanwhile, the missed projections in the US are being echoed in a flood of bad global economic data. As Edward Hugh notes, purchasing indexes for Germany, France, Italy, Spain, the Netherlands and Greece are all suggesting contraction. With growth in the BRICs slowing considerably, Hugh says that “the world’s industrial base is now, even in the best of cases, barely ekeing out growth.”

Certainly the markets don’t believe that policymakers are going to do anything about the slowdown. Europe, in Greg Ip’s estimation, is in the last phase of the Feldman CRIC cycle: crisis, response, improvement and, finally, complacency. Ryan Avent, echoing Brad DeLong’s words from last week, reads the latest data downturn and asks if  ”a broad institutional crisis appears to be brewing” where the markets increasingly distrust policymakers’ ability to do anything helpful. When we’re hearing whispers of a “broad-based global economic slowdown,” the world’s politicians and central bankers can’t afford more wrong projections.

Wonks
Taleb: It’s time to start rationing the amount of information you take in – Farnam Street

TBTF
Ken Lewis basically admits to withholding information from shareholders before the Merrill deal – NYT

Indicators
Global lending is now contracting at the fastest pace since ’08 – Telegraph

Must Read
George Soros’s compelling new speech on the “Euro bubble” – George Soros (PDF)

EU Mess
Germany suddenly willing to compromise to save the euro zone – WSJ
Portugal may actually be able to stick to its austerity goals – Reuters

Oxpeckers
The Viral Internet Commandments – Gawker

Green Acres
How urban trees reveal income inequality – Per Square Mile

New Normal
The majority of Americans who are unemployed have some college education – WSJ

Modest Proposals
Securitize the Queen – Bright Green Scotland

Old Normal
AIG CEO suggests raising the retirement age to 80 – Bloomberg

Cheer Up
Pop music is getting slower and sadder – Pacific Standard