OpEd: Deception. Chaos. Can AI help?

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Sometimes it’s just too much.

We are talking information. Or, rather, the immense choices of information. How do you know which source (or financial index) to choose? Or, which piece of information, earnings number, government index number or forecast is actually THE right one? Could AI help?

Let’s take inflation for an example. What is the “real” rate of inflation? It used to be pretty simple. The CPI (Consumer Price Index) and the PPI (Producer Price Index) were both the accepted gauge of inflation. But now there are a multitude of “adjusted” indexes to pick from. The Fed likes the PCE (personal consumption expenditures) price index. How is that different from the CPI? Hmmmmm! Both exclude food and energy (too bad if you get hungry and need to drive to the store) but what else? Well that’s a secret. By excluding, or “tweaking” some components of the index, inflation can be made to look a bit better. And yes, it does happen. Which index is the better gauge?

So that’s where deception comes in. It’s just like a magic trick. Get your eyes to be distracted while “magic” happens. In the inflation example, you know it is costing more to live, prices are up, it costs more to drive, food packages are smaller (and cost more) BUT the indexes tell you inflation is easing. Hmmmmm. Don’t look at your expenses, look at the “happy” inflation index numbers. Deception……or magic?

The same holds true for employment numbers. There are multiple ways to calculate the nation’s employment (or, unemployment) rate. Seasonal adjustments, revisions (like you will remember a few months ago), unemployment claims, etc. What’s the real number? Hmmmmmm! I read about layoffs and business cutbacks but the “numbers” show a strong labor market. Which is right? Well, how about some chaos; political, war, diseases, etc. to get your attention focused elsewhere. A ‘structured” chaos is like a magician’s magic act.

So can AI (artificial intelligence) lend some clarity? Can AI sort through all the deception, chaos, multiple information sources and indexes to actually create one usable number? Or could AI be corrupted and “infused” with bias? Hmmmmm! AI, savior or devil?