Frequently Asked Questions

What is the methodology for deciding whether a trend is statistically significant (an “established” or “confirmed” trend) in the “Easy Trends” analyses?

Here are a few basic notes on the process:

• I am only looking linear trends.  That is, I am looking for a way to connect the points in a straight line.  There may be more sophisticated techniques of fitting data, but I will stick with this one.
• I will only say an indicator is in an established trend if my statistical analysis tells me it’s “statistically significant,” which means that there is a 95% chance it is in a linear trend.
• I will allow one or two consecutive data points to fall outside a confirmed trend in the same direction (e.g., two data points that are both higher than trend) as long as the statistical significance of the trend remains at least 95 percent.  However, if there are three consecutive data points outside the original trend in the same direction (e.g., all three are higher than trend), I will begin reassessing from the point at which the first data point was off trend, regardless of the fact that the confidence level is better than 95 percent.
• If any data point causes the confidence level to drop below 50%, I will not wait for any more data points – I will consider it a broken trend and start over.
• Because this is Easynomics, not Hardnomics, I won’t get into the nitty gritty of my methodology.  But basically, I’m using simple linear regression and using the “Adjusted R-squared” as my determining factor for whether a new data point belongs in the trend.  Significance of the trend is established using the “Significance F” of 0.05 or lower.

What do some of these terms mean?

Data Day (not yet in use) - These are “day-to-day” indicators that are released, each providing some sense of where the economy is headed.  Don’t expect this every day, but on days when I post this, it will reflect that day’s new indicator releases.

Easy Intro – An explanation of a concept or indicator that is written in a way that most people should be able to understand.

Easy Pod - A collection of indicators that help portray the current status of something, like “Recession Risk” or “Real Estate.”

Easy Street - This section will help decipher what happened in the markets, specific company news and what any of that news might mean to the average person.  But also any big news items that are very important – and why they are important to anyone at all.  Again, it won’t be a daily post, but when posted, will reflect that day’s markets.

Easy Take – This is a summary or “bottom line” takeaway from an article or report that is being discussed.

Easynomics Real Estate Price Stability Index (EREPSI) - Go here for details on what this index is and how it’s calculated.

Economic Indicator Roundup - A summary of various indicators (numbers that help us measure something) that I follow regularly, where they stand now and any implications that may have for the state of the economy.

Indicator Deepdive  (not yet in use) - Sometimes, I will discuss a recent release of an indicator and dig a little deeper into what it means.

Tech It Easy – These posts discuss technical analysis.