Beware year over year

I am always amazed that marketplace analysts foist "year over year" data on the public. Listening to NPR this morning and "Marketplace", the initial reports regarding Black Friday sales figures indicate that they showed some improvement over last year.  Figures obviously aren't in but if you think back to the day after Thanksgiving in 2008, you might remember that our entire economic world turned upside down prior to that date (if not upside down, at least a horrific shake) so frankly anything that went on this year probably had to look good "year over year".  That's the rub in comparisons.

A look at the Dow about this time last year it was sliding toward the 7500 range and is now at 10,400 give or take.  We would "year over year" jump with glee at a 37% year over year increase and well we should. We could, however do a year over year 5 year and see that we are back to square one.....aside from dividends (which are scant) the Dow is down 4% over the period.

I bring this up, as the time frame for comparisons is the key factor. If we shorten the time frame to this month (Nov. 2009 all of it) we are up 7% that far exceeds the year over year rate amortized over 12 months (roughly double the rate of growth). 

We hear this year over year stuff all the time, housing starts for instance, or new mortgage apps.  Analysts must figure we don't have any memory for times past.  Just beware when someone trots out year over year verbiage.  It doesn't mean much unless you have a memory.