It’s all about data – the Toll Index

In mid August I was writing that against the gloom and doom German economic journalism is currently spreading “we feel confident going out on a limb to say that the real industrial production number for July (to be published by the BMWi in mid September) will have to reflect the positive Toll Index picture somehow” because  “it ought to be highly unlikely that all these heavy trucks drive around empty”. We were also a bit ironically forecasting that this would force “professional forecasting departments in the banking sector and elsewhere to postcast July in order to explain why they did not see it coming…”. Well now the numbers are out at the BMWI and I can say “we told you so”. German Industrial production in July “surprisingly” went up by 2.6% compared to the month before (seasonally etc adjusted of course) and even for June the number was adjusted upwards by .4 percentage points. Elsewhere I was commenting that the numbers on which economic journalism bases their gloomy outlook (which is border line irresponsible) “will be revised later and may in fact be wrong”. These numbers “ought to be well within the revision error” so that they  “should not be any more worth of a headline than the ink needed to print it”.

The only way to eliminate bad quality economic reporting is to change the way we measure things. To part from the ways of a bygone era of scarce computing resources and realise that we can timely measure and analyse the entirety of most observational universes. The Toll Index is such an example. Although the government failed to realise its full potential it still allows us an accurate, fast and timely look into the entirety of the fleet of heavy trucks roaming the german highways and hence a sneak peak into economic activity. Had the government utilised the full potential of the MAUT we could have a complete dump of heavy transport (and hence its associated economic activity) at the much higher frequency of every 3 days or so. Economic measurement has a long way to go before it is up to date with the current state of technology.

More on the Toll Index at the website of the IDSC of IZA. Our Journal of Forecasting paper on the Toll Index.

PS: And this just in (September 8): Marke von 100 Milliarden Euro geknackt.

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