Saturday, 12 April 2008

US Economic Data and Statistics- Distortions, Deceptions and Outright Lies

Take Friday's news, for example.

If you thought that the surge in the U.S. unemployment rate to 5.1% was a shock, consider John Williams' Shadow Government Statistics

First, Williams points out that the total job loss the government reported on Friday wasn't just 80,000. It was 147,000. Reason: The previous two months of job losses had been greatly understated, forcing the government to revise them by a combined 67,000.

Second, he argues that these huge revisions are no accident. They are the consequence of the government's continuing misuse of seasonal adjustments.

"If the process were honest," he writes in his Flash Update issued to paid subscribers on Friday, "the differences would go in both directions. Instead, the differences almost always suggest that the seasonal factors are being used to overstate the current month's relative payroll level, as seen last month and the month before."

Third, his analysis shows that the job numbers have a built-in bias based on a model that makes assumptions about birth and death rates. Without those distortions, he calculates there would have been additional job losses of 135,000 in February and 142,000 in March.

Fourth and most important, as you probably know, the government excludes "discouraged workers" from its count of the unemployed; and the definition of "discouraged" is highly questionable — anyone who has not looked for a job in just the past four weeks!

His conclusion: The true unemployment rate in America is not 5.1%. It's 13% , or over two and a half times worse than officially reported.

http://www.marketoracle.co.uk/Article4280.html

This is a MUST READ article. The author here points out there are strong reasons to believe that the US economy has been in decline (recession) for most of the last decade. Be wary of investing in the USA !


[Posted at the SpookyWeather blog, April 12th, 2008.]

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