When you are considering economic data and other numbers—for example, financial data—watch out for the following ways of misinterpreting information.
Correlation Is Not Causality
Just because two variables seem related, one is not necessarily causing the other to occur. For example, suppose in our earlier example of the average U.S. temperature and growth in GDP, we found that the higher the average temperature, the higher the growth rate in GDP.
It would be premature to assume that the higher average temperatures were causing the higher growth simply because high temperature and high growth were correlated. (Correlated is a mathematical term meaning that two variables move together, in either an inverse or positive relationship, ...