What sort of economic signals should we be watching?

Day after day the media wait on any new economic statistic. Sometimes it is given unforeseen importance. At other times, it is lost in a labyrinth of nuance. Either way, we start the next day knowing no more than the day before.

Frustrated, I went with that question to visit Harvey Rosenblum, senior vice president and director of research at the Federal Reserve Bank of Dallas. You should know that Mr. Rosenblum isn't someone you visit if you've got a hunger for sound bites. He's a very deliberate man, not given to hyperbole.

He also has a unique perspective, having gone to the World Trade Center in September to be installed as the new President of the National Association of Business Economists and having emerged, on September 11th, with the clothes on his back. Like a character in a 21st century Henry James novel, he left Ground Zero intact except for one incredibly important detail.

His laptop, with years of files and data--- the lifeblood of his work--- was left behind.

"It's not important," he told me.

What matters in times like this, he explained, isn't the usual litany of statistics.

"I tend to distrust data due to the inertia of its collection," he said. "It can't measure what's really happening. I don't trust the data or the models it goes into."

Where the Association of Business Economists had surveyed its membership monthly before 9/11, he is now having the survey done every two weeks and making sure that members can participate in regular teleconferences.

"It's very similar to what the Fed does with its anecdotal reports from business leaders. In a period of rapid change, that's the only meaningful data."

I asked what he thought of the recession and how his experience on 9/11 had changed his perspective. Here are some of his comments.

"Within five minutes of leaving the Trade Center I knew America was different. People were passing cell phones to strangers so they could make calls and shops were open for the same reason."

"… We're in a recession. But without the 911 attacks we might have avoided one. The resilience of our economy is such that it will probably be a short recession."

While some are worried that zero percent financing and the massive automobile sales it induced has only worked to steal car sales from next year, Mr. Rosenblum isn't concerned. "I have a feeling that America is going to be taking a lot more auto trips, " he said. Having newer cars will come in handy.

"I think there will be a quick end to gangsta rap (music). If it's still out there it's greatly diminished because firemen and policemen are heroes again."

"The border (U.S./Mexico) has been enormously affected. Crossing delays have gone from one hour to six hours or more--- even in slow periods. If everything were at peak capacity, the way it was a year ago, it would be much slower. Immigration will be much slower and it's happening just when we were starting to see a more transparent border. We shouldn't abandon that idea.

"What's happening on the border is so bad that people (businesses) will have to make a choice. Now, when you can't do just-in-time inventory, etc. there's an incentive to make changes (to the technology used for border crossings.)"

What about complaints that Fed policy isn't working, I asked.

"There's so much stimulus in the pipeline. Energy prices are lower. Every time we're in a recession someone says monetary policy isn't working. But it eventually kicks in. I doubt that GM or Ford would have been willing to offer zero percent financing if interest rates weren't down to 2.5 percent. It could also happen with mortgages.

"It's monetary policy kicking in in ways that differ each cycle.

"Now ask the question another way. What would things be like if the Fed hadn't acted? Everyone has been paying attention to the Fed cuts so it's easy to overlook what the Fed did on 9/11.

"The Fed said 'We're open for business.' Banks could honor commitments. The financial system didn't freeze up…

"People forget what we do during a crisis--- 87' was the last time we went full swing. During the Long Term Capital crisis we just helped effect a deal.

"But look around. The financial highway is still there, without speed bumps. Think of the New York Stock Exchange. Without a functioning financial system, it's reopening could have been delayed."

I asked if he had come away from 9/11 with any personal imperatives, particularly in his daily work. He nodded vigorously.

"The rule books don't exist. We simply have to do the right thing. We can't let bureaucrats get in the way. The people who survived (the WTC attack) were the people who acted on their instincts. They didn't stay in their offices. They left the building.

"Corporations often say that people are most important. The question is how you make them feel it."  

  

Sidebar:

Visiting the Fed after 9/11

The security procedures started in the morning with a call asking for a description of my car and its license plate. At midday, when I arrived at the gated parking lot, I identified myself on an intercom to get into the lot. My name was checked against the list of expected visitors, the gate rose, and I was told to enter.

Inside, a security guard greeted me. He was equipped with a mysterious detection device. He asked me to open the hood and ran the instrument around the perimeter of my newly ominous turbo Beetle. He cleared me to go through another gate to some parking spots that were closer to the building.

I parked the car and headed for the first door, into an entryway. A second door opened to a large exhibition space and a massive raised marble desk manned by two security guards. One asked me for a photo ID and examined it. He called the person expecting me.

The person expecting me came to an electronically controlled turnstile-door made of thick bulletproof plastic, wiped an identification badge on a sensor, and came through the turnstile-door.

Only then did the security guard give me a visitor badge which, when used on a sensor, would allow me into the actual building, escorted by the person I was visiting.

To be sure, district Fed banks have always been secure buildings--- they don't want people walking off, willy-nilly, with shopping carts filled with neatly bundled $20 bills. But this--- well it's a new world.

Returning to my office, I first showed my photo ID to the guards at the gate, parked my car, walked to the building, and used my new electronic pass card to open the lock to the employee entrance.

As I said, it's a new world.