Figures Don't Lie

Many years ago, my Uncle Wes was listening to a political commentary on the evening news. About halfway through the piece he got up, turned the TV off and told me: "Figures don't lie but liars sure can figure" This Blog is dedicated to setting things right about a few of the numbers tossed around in today's political discussions.

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Location: Bloomington, Minnesota, United States

How old am I? Well, for much of my career, I had a secretary. And, my best secretary could take shorthand.

Friday, May 15, 2009

NYT Economics Reporter Successfully Times the Market

The New York Times economic reporter, Ed Andrews, paints a grim picture of his own economic situation in this article in the May 14th edition of The New York Times Magazine. We learn from Greg Mankiw that Andrews is a "diligent Washington reporter," so he is probably not making this story up.

In the article, Andrews describes his purchase of a $460,000 home with $414,000 worth of mortgages and $2,500 in monthly mortgage payments. What makes this worthy of a news story is that Andrews only had $2,777 in monthly take home pay. Plus his new wife's income from a new job selling clothing that brought in another $2,500 a month. If you suspect that two adults, three full time and two part-time children are going to have trouble living on $33,000 a year in the New York and Washington area you are so right. The $33,000 is what our economic reporter and wife have left after the mortgage payment. But read the whole article to see just how badly it plays out.

But. Let's look at the bright, unstated, side of the story. It appears that $45,000 of Andrews home purchase came from his sale of New York Times stock early in the story - possibly around 2004. As the chart shows:

this means Andrews sold his stock at around $40 a share versus current prices around $7 or even less earlier this year.

Read the article and you will see that Andrews turned his $45,000 worth of NYT stock into home equity and then into consumer spending of perhaps $100,000. Not a bad performance versus seeing it shrink to about $5,000 in the market. Not wise, certainly, but not a bad investment performance.

The story is certainly a tragedy. But self-inflicted by someone who ought to have had a clue if not a budget. We can only hope Andrews' sake that people buy the book but no one follows his example.


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