Economist: Government statistics are fantasy, disinformation

Source: San Francisco Chronicle

Oakland economist John Williams doesn't seem like the kind of guy to pick fights with the government.

... But don't be fooled. The New Jersey native is leading a one-man crusade to expose official economic data as grossly misleading at best and, at worst, a pack of lies.

His Shadow Government Statistics Web site (shadowstats.com) has become a magnet for those convinced that official data put a happy-talk gloss on the nation's economy. The growing popularity of the site, which costs subscribers $175 a year, is testimony to the deep suspicion many Americans harbor about government information as the economy falls into a swoon.

... By Williams' estimation, the government's calculation that unemployment was 5 percent in April and that inflation was 4 percent and economic growth 2 percent over the last year, is fantasy. It might even be disinformation.

... By his reckoning, the economy shrank 2.5 percent in the year that ended in March, unemployment is really 13 percent and year-over-year inflation is 7.5 percent.

... For example, over the last 25 years, several technical changes have been made in the way the consumer price index is calculated:

... Each of these changes has had the effect of reducing the reported inflation rate, according to Williams.

... With unemployment, for example, Williams takes the standard jobless rate - 5 percent in April - which consists of people who have looked for work within the last 30 days. Then he adds in several other categories tabulated by the Labor Department, including those who say they have looked for a job in the last year but have given up and those who are working part-time but want a full-time job. Finally, he throws in several million people who say they want work, but haven't looked in more than a year. Voila - 13 percent unemployment.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/25/BU6K10JTEF.DTL&tsp=1

His website is excellent, and answers why the economy is booming - but really isn't. If you've every wondered by inflation or unemployment or GDP figures can look so good but your personal experiences tell such a different story, go to his website and uou'll see why.

When the levee breaks......

What we are seeing in the market right now, for instance, is a sucker recovery. They can't just keep lowering interest rates forever, and as you point out we're getting to a point where the lies will not work anymore.

Aside from the changed weighting, the average person also tends to sense higher inflation than is reported by the BLS, because of hedonics, as in hedonism. Hedonics adjusts the prices of goods for the increased pleasure the consumer derives from them. That new washing machine you bought did not cost you 20% more than it would have cost you last year, because you got an offsetting 20% increase in the pleasure you derive from pushing its new electronic control buttons instead of turning that old noisy dial, according to the BLS.

When gasoline rises 10 cents per gallon because of a federally mandated gasoline additive, the increased gasoline cost does not contribute to inflation. Instead, the 10 cents is eliminated from the CPI because of the offsetting hedonic thrills the consumer gets from breathing cleaner air. The same principle applies to federally mandated safety features in automobiles. I have not attempted to quantify the effects of questionable quality adjustments to the CPI, but they are substantial.

Then there is "intervention analysis" in the seasonal adjustment process, when a commodity, like gasoline, goes through violent price swings. Intervention analysis is done to tone down the volatility. As a result, somehow, rising gasoline prices never seem to get fully reflected in the CPI, but the declining prices sure do.

http://www.shadowstats.com/article/56

Interesting article.

The current administration has fabricated ALL types of data to paint a much rosier picture than the absolute horrible reality; the state and cost of the 'war', the dismal economy, the extremely HIGH ACTUAL unemployment, the value of the spiraling downward US currency, the greatly pumped up M3 money supply, the fragile state of our financial system, the despair and horrible condition of the American people, the number of jobs outsourced to foreign slave wage nations, denial about the actual condition of the environment, denial about ever accelerating climate change and global warming, the fabricated unrealistically low inflation rate, etc., etc., etc. NOTHING is real and ALL the data is a HUMONGOUS LIE! The US in the first phase of the GREATEST DEPRESSION. NOTHING can be fixed UNTIL the government admits there is a SERIOUS PROBLEM. Unrealistically low FED rates to the CRIMINALS that have largely perpetrated the PROBLEM certainly is NOT the answer or the solution. The current WH and Congress are a large part of the ongoing PROBLEM. The CURRENT SYSTEM needs to be flushed TWICE!

Control the language,
Control the facts,
Control the perception,
Control the message,
Control the vote,
Control the people,
Control the world.

People hate being lied to, and people know the inflation and unemployment figures are being pulled out of some wonk's ass. They know the score every time they go to buy food or gas up the car or get their hours cut at work because business is down. They know every time they get a toothache and hope over the counter crap will knock it down enough that they can work another day and maybe it won't kill them.

Mostly they know this gang of shitbags in power are a bunch of thieves and liars.

What is wrong with this picture?

I think many more economists would come to Williams' conclusions. He's using public information. However, this is the Bush Administration we're talking about.

Identical, really, if you eliminate the piffl;ing economic differences between and focus on the vast number of authoritarian and criminal similarities.

But again, it is always nice to get a confirmation of the obvious, with all the i's dotted and the t's crossed.