Stone Cold Proof That Government Economic Numbers Are Being Highly Manipulated by MICHAEL SNYDER | ECONOMIC COLLAPSE | JUNE 26, 2014
The figures are being manipulated How in the world does the government expect us to trust the economic numbers that they give us anymore? For a long time, many have suspected that they were being manipulated, and as you will see below we now have stone cold proof that this is indeed the case. But first, let’s talk about the revised GDP number for the first quarter of 2014 that was just released. Initially, they told us that the U.S. economy only shrank by 0.1 percent in Q1. Then that was revised down to a 1.0 percent contraction, and now we are being informed that the economy actually contracted by a whopping 2.9 percent during the first quarter. So what are we actually supposed to believe? Sometimes I almost get the feeling that government bureaucrats are just throwing darts at a dartboard in order to get these numbers. Of course that is not actually true, but how do we know that we can actually trust the numbers that they give to us? Over at shadowstats.com, John Williams publishes alternative economic statistics that he believes are much more realistic than the government numbers. According to his figures, the U.S. economy has actually been continually contracting since 2005. That would mean that we have been in a recession for the last nine years. Could it be possible that he is right and the bureaucrats in Washington D.C. are wrong? Before you answer that question, read the rest of this article. It just might change your thinking a bit. Another number that many have accused of being highly manipulated is the inflation rate.
But we don’t have to sit around and wonder if that figure is being manipulated. The truth is that even those that work inside the Federal Reserve admit that it is being manipulated. As Robert Wenzel recently pointed out, Mike Bryan, a vice president and senior economist in the Atlanta Fed’s research department, has been very open about the fact that the way inflation is calculated has been changed almost every month at times… The Economist retells a conversation with Stephen Roach, who in the 1970s worked for the Federal Reserve under Chairman Arthur Burns. Roach remembers that when oil prices surged around 1973, Burns asked Federal Reserve Board economists to strip those prices out of the CPI “to get a less distorted measure. When food prices then rose sharply, they stripped those out too—followed by used cars, children’s toys, jewellery, housing and so on, until around half of the CPI basket was excluded because it was supposedly ‘distorted’” by forces outside the control of the central bank. The story goes on to say that, at least in part because of these actions, the Fed failed to spot the breadth of the inflationary threat of the 1970s. I have a similar story. I remember a morning in 1991 at a meeting of the Federal Reserve Bank of Cleveland’s board of directors. I was welcomed to the lectern with, “Now it’s time to see what Mike is going to throw out of the CPI this month.” It was an uncomfortable moment for me that had a lasting influence. It was my motivation for constructing the Cleveland Fed’s median CPI. I am a reasonably skilled reader of a monthly CPI release. And since I approached each monthly report with a pretty clear idea of what the actual rate of inflation was, it was always pretty easy for me to look across the items in the CPI market basket and identify any offending—or “distorted”—price change. Stripping these items from the price statistic revealed the truth—and confirmed that I was right all along about the actual rate of inflation. Right now, the Federal Reserve tells us that the inflation rate is sitting at about 2 percent. But according to John Williams, if the inflation rate was calculated the same way that it was in 1990 it would be nearly 6 percent. And if the inflation rate was calculated the same way that it was in 1980 it would be nearly 10 percent. So which number are we supposed to believe? The one that makes us feel the best? And without a doubt, “2 percent inflation” sounds a whole lot better than “10 percent inflation” does. But anyone that does any grocery shopping knows that we are definitely not in a low inflation environment. For much more on this, please see my previous article entitled “Inflation? Only If You Look At Food, Water, Gas, Electricity And Everything Else“. Of course the unemployment rate is being manipulated as well. Just consider the following excerpt from a recent New York Post article… In case you are just joining this ongoing drama, the Labor Department pays Census to conduct the monthly Household Survey that produces the national unemployment rate, which despite numerous failings is — inexplicably — still very important to the Federal Reserve and others.
One of the problems with the report is that Census field representatives — the folks who knock on doors to conduct the surveys — and their supervisors have, according to my sources, been shortcutting the interview process. Rather than collect fresh data each month as they are supposed to do, Census workers have been filling in the blanks with past months’ data. This helps them meet the strict quota of successful interviews set by Labor. That’s just one of the ways the surveys are falsified. The Federal Reserve would have us believe that the unemployment rate in the U.S. has fallen from a peak of 10.0 percent during the recession all the way down to 6.3 percent now. But according to shadowstats.com, the broadest measure of unemployment is well over 20 percent and has kept rising since the end of the last recession. And according to the Federal Reserve’s own numbers, the percentage of working age Americans with a job has barely increased over the past four years…
The chart above looks like a long-term employment decline to me. But that is not the story that the government bureaucrats are selling to us. So where does the truth lie? What numbers are we actually supposed to believe?
The U.S. Economy Has Collapsed: “This Is A Monstrous Negative Revision” by MAC SLAVO | SHTFPLAN.COM | JUNE 26, 2014
We're not talking about a recession. We're talking about a collapse For months the administration, financial pundits and Wall Street analysts made it a point to inform Americans about the healthy state of our economy. One of the key metrics they’ve used as proof of recovery was the Gross Domestic Product (GDP) which measures the productive output of the U.S. economy as a whole. Earlier this year the U.S. Bureau of Economic Analysis noted that this measure was showing positive growth. But now, after a second official revision, all of that purported growth used to goad consumers into spending more money on homes, cars and other goods has been revealed to be nothing but conjecture. According to the BEA, not only did economic growth stall during the first quarter of 2014, it completely collapsed, signalling a significant shift in consumption habits amid increasing food and energy prices: Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 2.9 percent in the first quarter of 2014 according to the “third” estimate released by the Bureau of Economic Analysis. The government first made consumers believe that the economy grew. Then they revised this down to slight negative growth. The latest revision of -2.9% growth is significant, because even with official inflation at over 2% America’s economic output has declined. It seems that no matter how much money they pump into the system, it isn’t enough to offset the lack of income or job growth. This is a monstrous negative revision.
A big part of it was non-residential fixed investment. Rather than invest, companies have issued debt and bought back stock. But this does nothing for the economy — it simply blows a bubble in the market. How long before that comes home to roost? Not long now, I suspect. If you think companies don’t expect a recession inbound, you’re nuts. Inventory drawdowns subtracted 1.7% from the GDP number. Companies don’t build inventories if they don’t think they can sell them — as such this is a forward indicator. Oh, and current production profits? They’re down while current taxes were up. Obamacare anyone? Worse is that undistributed profits decreased too and this is the second quarter sequentially in which they did. What does a company pay dividends with? Undistributed profits. So for two quarter the markets has risen like a rocket while the fuel for that rise has been exhausted for the last six months. This will turn out well, I’m sure. Source: Karl Denninger’s Market Ticker Officially, we have not yet entered a recession. That requires two quarters of negative growth. However, the current trend indicates that’s exactly what’s going to happen. In the next 30 days the BEA should be releasing the GDP rate for the second quarter of 2014. According to economist John Williams that will more than likely show a negative print and will lead to an official confirmation that the U.S. has entered another recession. What’s worse, unlike the previous recession that followed the collapse of 2008, there is no way out of this one. The reason for this is that the consumer is strapped… doesn’t have the liquidity to fuel the growth in consumption. Income… the median household income, net of inflation, is as low as it was in 1967. The average guy is not staying ahead of inflation.
… As a result – personal consumption is more than two thirds of the economy – there’s no way you can have positive sustainable growth in the U.S. economy without the consumer being healthy. … As the renewed downturn gains wider acceptance or wider recognition, that will intensify the selling pressure. When someone starts selling, it’s going to be a race for the door, and I am looking for a dollar selling panic to be the trigger for the onset of hyperinflation. … I don’t see what will save it at this point. To cries of fear mongering and ‘doom porn’ contrarian economists and analysts warned that these numbers were being fabricated, despite the fact the the underlying fundamentals showed a clear drawdown in consumer confidence, company inventory, home sales and overall spending. Now all of those warnings are coming to pass. We have entered the next leg down and given that the governments of the world have pretty much used up all of the arrows in their quivers, there is nothing to stop what’s coming. And what’s coming is nothing short of a complete collapse of our way of life. Hard to believe? Yes. Implausible? No. It is so plausible, in fact, that well known radio commentator Mark Levin recently noted that the U.S. government has been actively preparing for and simulating the collapse of our financial system, as well as the widespread violence that will follow. I’ll tell you what I think they’re simulating. The collapse of our financial system, the collapse of our society and the potential for widespread violence, looting, killing in the streets, because that’s what happens when an economy collapses. I’m not talking about a recession. I’m talking about a collapse, when people are desperate, when they can’t get food or clothing, when they have no way of going from place to place, when they can’t protect themselves. There aren’t enough police officers on the face of the earth to adequately handle a situation like that. This is happening right here and now. The streets may not devolve into madness tomorrow or next month, but piece by piece the foundations of America’s economic health and social structure are crumbling. The time to finalize preparations for what’s coming is now. It’s going to go from bad to worse.
U.S. Gross Domestic Product Shrinks At Fastest Rate In 5 Years by ALLGOV | JUNE 28, 2014 Drop caught economists off-guard Without sounding alarmist, the federal government announced this week that the economy nosedived during the first quarter of this year. The drop caught economists off-guard, but didn’t produce warnings of another recession. From January to March, the nation’s gross domestic product (GDP) took a big step backwards, contracting at an annual rate of 2.9%. The decline was the sharpest in five years, going back to the 5.4% drop during the first three months of 2009. Experts did expect some economic shrinkage during the period, but the estimates pegged it at only 1%. Economists attributed the weak economic showing to several causes: shrinking business inventories, a terrible winter throughout much of the country, and an unexpected dip in health care spending. That sector is expected to be volatile as the new health care law, which is expected to cut spending, takes effect. The good news is the numbers do not portend another economic downturn. Neil Irwin at The New York Times wrote: “What makes the sharply negative number all the more stunning is that it did not feel like an economic contraction at all in the first quarter. Employers kept adding jobs at a reasonably healthy pace. Many measures of business activity and consumer confidence were stable.” The problem, though, is that the first-quarter plummet is going to make it that much harder for the economy to produce even a so-so year for the rest of 2014. “The brutal math of GDP means that the nation now looks consigned to another year of sluggish growth at best—and that’s true even if there is a pickup over the remainder of the year. For example, if the economy were to grow at a 4 percent pace each of the three final quarters of 2014—a level only attained twice in the last five years, and never in consecutive quarters—the overall growth rate for 2014 would still work out to only a tepid 2.2 percent,” according to Irwin. Forecasters are predicting a good second quarter, with growth at about 3.5%.
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