When discussing the economy, two terms are often used; the real economy and the financial economy. They are separate entities, but they do often influence each other. It’s easy to confuse the two, and municipalities often use the wrong information to support their case. It’s important to differentiate between what information is relevant and irrelevant at your interest arbitration hearing.
The financial economy is concerned with movements in the stock and bond markets, interest rates, and foreign exchange rates. The real economy is concerned with economic growth, unemployment, and inflation. The two tend to move together over time, but in the short-term, can move independently of each other.
Municipalities often take irrelevant information, and try to construct an argument that supports their case. A common tactic they use is to take information from one sphere and incorrectly apply it to the other. For example, earlier in 2019, a number of municipalities claimed that the US economy was weak because the stock market experienced a decline at the end of 2018. However, they made no mention of the strong labor market or of the robust economic growth that the US was experiencing. Essentially, the financial economy and the real economy were saying different things at that point in time.
At your next interest arbitration hearing, don’t let your opponent get away with using irrelevant information. Understand what is important, explain why it’s important, and ultimately how it supports your case. If you can further explain why your opponent’s information is irrelevant, you’ll make your position even stronger.
