NEW YORK (CNN/Money) - The bulk of the economic news to come out recently has been good. But little has been as good as expected.
Take a gander at the major economic numbers that have come out over the past month -- housing starts, the trade gap, retail sales, the jobs report, the Institute for Supply Management's manufacturing numbers, fourth quarter gross domestic product -- and you'll see that many of them fell short of economists' expectations.
"The consensus was too exuberant coming into this quarter -- and probably is too exuberant for the balance of the year, as far as I can see," said Merrill Lynch chief North American economist David Rosenberg.
Rosenberg keeps track of how economic numbers are coming in relative to expectations with something he calls a "data-diffusion index". When the news is mostly better-than-expected, the index climbs into positive territory; when it's worse, the index dips into negative.
More than half the time over the past decade, the index has been in negative territory -- apparently economists aren't as unduly gloomy as they are often made to be. But rarely has the index been quite so negative as it is now.
This provides a big clue to why Treasurys have done so well recently, pushing the yield on the 10-year note back down near 4 percent. The buzz in the market may be all about how Asian central banks are buying up bonds like crazy, but Rosenberg's index tracks Treasury yields (often leading them by a bit) remarkably well.
"The markets are always benchmarked against expectations," said Rosenberg -- which is precisely what his index is benchmarked against as well.
Although the index is not an economic forecast -- at least not anymore than Treasury yields are -- it should give Wall Street pause. If the economy has lately not been performing anywhere close to expectations, corporate earnings, too, may be a little less rosy than investors think.