Jean's Blog

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Managing Expectations

Posted by Jean

Stocks rallied in early trading today.  Why?  Because the jobs number — as dismal as it was, and it was dismal, bringing us to an 8.1 percent unemployment rate, a 25-year high — was on target.  It was as expected.  As in — not a surprise, not out of left field. The market quickly gave back the gains (what else is new) but I think there’s a bigger lesson here. 

When you manage expectations and then you deliver as promised (or as expected) the markets don’t crater and the world doesn’t feel as if it is falling apart.  You knew what was coming.  You knew it wasn’t going to be pleasant.  But it doesn’t knock the wind out of your sails because you haven’t allowed them to take on that much wind to begin with.

So: Who needs to learn this lesson?

Parents, who may need to explain to their kids why the summer vacation has become a staycation.

Managers, who may need to explain to their staffers that they’re going to have to go without raises or consider a four-day week.

But right now, Washington needs it more than anyone.  Tell us what’s coming.  Be transparent.  Keep your word. When you say you’re slashing earmarks, then go ahead and slash them (we don’t believe it’s George W’s budget when he’s visiting his mother in the hospital and you’re minding the store).   We need to know what the scenario really looks like.  Only then do we have a hope or a prayer of being surprised on the upside.