From: russet 12/22/2009 7:36:01 PM
1 Recommendation of 105775
False Positive Signals For The Economy
18 December 2009 6 Comments
By Greg Hunter
usawatchdog.com
According to economist John Williams at Shadow Government Statistics (SGS), we are getting “… false positive signals…” for monthly numbers such as retail sales and unemployment. So, a recovery looks like it is taking place when a deeper analysis into the government numbers shows it is not. Williams says in his latest report, “Generally, the economy continues to sink or bottom-bounce; no recovery is in place.”
A perfect example of a false positive is the seasonally-adjusted retail sales data from last year compared to now. In November 2008, we were in the middle of a financial meltdown. When you simply compare this November to last November, it looks like there are improving sales. But if you compare November 2009 to normal years when we were not in a meltdown, such as 2006 and 2007, then retail sales have fallen slightly.
The government has recently been reporting low inflation numbers and, in fact, inflation has gone down because of the ongoing financial crisis. But this month, inflation bounced back according to Williams. The annual Consumer Price Index jumped to 8.8%. Williams calculates inflation the way the government did it before 1980. He does that to get a truer read of the “real” inflation picture. In my mind, this is the real cost of maintaining your standard of “living” as opposed to maintaining the cost of “surviving.” The cost of surviving is what you get when the government substitutes hamburger for steak when the price of meat goes up. In short, modern government calculation gimmicks distort inflation to make it look less than it really is. That can also give a false positive for the economy.
Unemployment is another area that the government distorts to look better that it really is. Officially, the Bureau of Labor Statistic (BLS) says unemployment is at 10%. If you calculate unemployment the way BLS did it before 1994, as Williams does, the true unemployment rate would be more than 21%. If unemployment was reported by the government at more than 20%, it would not look like the country is recovering, would it?
The same distortions are showing up in housing this month according to Shadow Government Statistics. According to the latest government data, housing starts were up a surprising 8.9%! In fact, housing starts are about half of what they were in 1990! The government got the big increase because of calculation gimmicks to make housing look better than it really is according to SGS. Williams says, “The November housing “gain” is statistically not different from zero.” In other words, “there is no recovery in place.” The mainstream media should question all government numbers but, instead, the data is accepted as totally accurate. It seems to me that government data these days is all about hype and false hope. |
