Ups and downs

Sullivan points out that poor Paul Krugman can't seem to make up his mind as to whether the economy is getting better or worse:

Is it just me, or has the economic news started to darken again?

Sullivan then prints a rejoinder from Free Exchange:

The first and most obvious point to make is that news can surprise on the downside while still trending toward improvement if expectations have improved more rapidly than the data.

Which doesn't entirely eliminate the other possibility, that the second and, at least to me, equally obvious point to make is that news can surprise on the upside while still trending toward decline if irrational hope has improved more rapidly than the data.