Don’t Fall For Economic Chart Slop On Social Media

Financial misinformation isn’t new, but today, it’s supercharged. The 24/7 news cycle fueled by social media virality means you’re more likely than ever to consume inaccurate or misleading information every day. Sometimes these narratives, no matter how false, seep into our collective consciousness and give a false impression of our finances and the economy. This is the basis of a “vibecession,” that is, a disconnect between the actual performance of the economy and our overly negative perception of it.

Take, for example, a chart that made the social media rounds recently. It peddled the message that ChatGPT’s launch is directly responsible for a decline in job openings. 

Yes, it looks bad, but the reality is much more nuanced — lots of things happened around the time of ChatGPT’s launch that could have contributed to a decline in job openings. The viral chart was misleading at best and outright false at worst, but that didn’t stop people passing it on as gospel.

So why does it matter? Because people’s perceptions of the economy can influence their actions in hard-to-predict ways. If their perceptions are misinformed, they might delay important financial decisions or engage in risky financial behavior. For instance, if you saw that chart and are already worried about AI taking your job, are you rushing to buy a new home or start a major renovation on the one you have?  Alternatively, if this “data” supports a fatalistic hopelessness about your economic future, are you more likely to make increasingly risky financial choices to escape your perceived dead-end?

Zoom out and imagine this happening across the country, and you’ve got an economy at risk of shocks or disruptions based on people’s potentially misinformed perceptions. 

In my 15 years of working with families I’ve found that financial anxiety is often rooted in both economic conditions and emotion. Money is deeply personal and amplifies our own baggage. When headlines and our social media feeds reinforce our gloomiest beliefs, bad sentiment can grow. 

Financial misinformation is more widespread than I’ve ever seen. Unfortunately, not everyone has a financial advisor to help them wrestle with these narratives, which means they risk making bad financial decisions based on bad economic information. Interpreting the wealth of financial data and viewing outside of our own personal experiences is challenging. Read on to learn how to spot a misleading chart and keep your financial perspectives grounded in reality. 

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Not all money advice online is worth following, but it can be hard to know what information to trust. Here?s how to spot financial slop before it spreads. ?

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How to spot and avoid finance slop

The availability today of economic and financial data is a blessing, but it becomes a curse when sensationalized for virality or ill-intent. Being able to spot charts, data or financial claims that don’t add up is a critical skill for discerning what is real — and what isn’t. Here are some clues you’re looking at something that stinks.

• No axis, truncated axis or misaligned axes: Without a proper axis (that is, the horizontal and vertical lines that establish the ranges for the data on a chart), the data can be stretched, scrunched and manipulated to fit a narrative.
• No labels or unclear labels: If you can’t tell what a chart is measuring, you can’t take it seriously. 
• No data source or ambiguous data source: “Trust me, bro…” doesn’t work. Without a proper and verifiable data source, toss it out immediately no matter how compelling the argument.
• Implied correlations: Two or more lines that follow one another mean nothing. There are plenty of examples of lines that move in similar ways without having any relationship to one another. For instance, summertime is the peak for both ice cream sales and shark attacks, but neither impacts the other.
• Cherry-picked time frames: Always consider what the motivation might be for the timeframe used. If a different one was used, would the implications of the chart change?
• Complete chaos: Charts and data visuals should create clarity, not confusion. If you can’t understand it clearly, the creator isn’t operating on a higher level, and it is a bad chart. 

Let’s take a look at that viral chart about ChatGPT and job openings. It is easy to see why this might shock someone who already has fears that AI is an existential crisis.

Here’s where this chart goes wrong:

No vertical axis

There is no measurement or justification for how or why these lines are positioned where they are. It’s misleading. Given that the S&P 500 is measured in thousands of dollars and job openings are measured in millions of jobs, we’re off to a bad start. 

These lines appear to be fitted specifically for effect. But you can’t compare these lines in absolute values. This chart instead should be indexed to a single value in the past to align their unit values. Like this: 

Implied correlations

The vertical ChatGPT line is meant to imply that it is the cause of each line’s subsequent movement. It is not. Even if we assumed that ChatGPT back then was as good as it is now, it simply wasn’t launched early enough to have triggered these reversals. Furthermore, ChatGPT wasn’t the only thing that happened at that time. What else could have driven jobs down and the S&P up?

Correcting the chart as we’ve done makes it easier to notice that the job openings were already on a downward track before ChatGPT launched. Job openings peaked in March 2022, the same month as the first Federal Reserve interest rate hike, while ChatGPT launched at the end of November. 

The same is also true for the S&P 500. It bottomed on Oct. 12, 2022, and rose nearly 8% by the end of month, all before anyone had ever heard of ChatGPT. If we isolate the job openings in a chart, it’s easier to see the start of the downward trend.

Where to look for quality data

The availability of reliable data is astounding, but it doesn’t advertise the same way the flashiest viral content does. Here are a few of the best places to find authentic economic and financial data:

U.S. Federal Reserve Banks: The U.S. Federal Reserve system is made up of 12 regional banks and each conducts studies and data analysis to understand our economy. The Federal Reserve Bank of St. Louis aggregates thousands of datasets from public and private sources in its FRED website and it is one of the reasons the U.S. remains the global gold standard in economic data. 

U.S. government agencies

Private financial data: It is easy to take for granted the abundance of quality data that comes from the private sector. Banks, financial institutions, company earnings and non-profit research organizations, as well as individual economists and high-quality financial education websites, produce more research than anyone could hope to consume. Here are some of my trusted favorites:

Only you can avoid financial slop

Social media is entertainment first, not education. If you depend on only correct and unbiased messages being delivered to you in your feed, you’ll be sorely disappointed. A discerning eye is the best defense against misleading information. When in doubt, independently verify with dependable, fact-checked sources. 

You can be skeptical without being cynical. The more we all push back on bad information the better we can protect each other from financial slop warping our outlooks.