Vital for investors to know the difference between good and bad data

ON Monday, I cast doubt on the many stories about how Black Friday retail sales were off to a disappointing start. This is an important story because retail is such a critical part of the US economy, and because such a large share of the industry's sales occur during the roughly five weeks between Thanksgiving and Christmas.

But the more important point - at least for my purposes - is that the initial reports, thanks to the National Retail Federation (NRF), are a case study in how to obtain meaningless data and then put it to bad use.

The NRF reported a 3.5 per cent drop in spending. "Average spending per person over Thanksgiving weekend totalled US$289.19, down slightly from US$299.60 last year," the organisation said in a statement. This information was based on asking consumers how much they figured they would spend this year versus a year ago.