The Economic Numbers Game (May 5, 2008)

“The truth, though it would not exactly set Americans free, would at least open a window to wider economic and political understanding.  Readers should ask themselves how much angrier the electorate might be if the media, over the past five years, had been citing 8 percent unemployment (instead of 5 percent), 5 percent inflation (instead of 2 percent), and average annual growth in the 1 percent range (instead of the 3 – 4 percent range).

. . .

The real numbers, to most economically minded Americans, would be a face full of cold water.  Based on the criteria in place a quarter century ago, today’s U.S. unemployment rate is somewhere between 9 percent and 12 percent; the inflation rate is as high as 7 or even 10 percent; economic growth since the recession of 2001 has been mediocre, despite a huge surge in the wealth and incomes of the superrich, and we are falling back into recession.

If what we have been sold in recent years has been delusional “Pollyanna Creep,” what we really need today is a picture of our economy ex-distortion.  For what it would reveal is a nation in deep difficulty not just domestically but globally.”

Kevin Phillips

The CPI (Consumer Price Index), the benchmark for measuring inflation, underreports the actual prices for necessities such as food and energy.  [See the e-ssay dated July 16, 2007 entitled “Back Door Inflation.”]  The current CPI is “inflation sans inflation.”  The U-3 unemployment figures underreport unemployment, whereas the U-6 figures are more accurate.  The reporters should report the U-6 figures.

Perhaps the government should simply state and the media could mindlessly repeat that there is no inflation and are no unemployed citizens while the economy is growing ten percent every year.  How much less true would these statements be than the current statistics?

“Transparency” is the rage in many disciplines today.  Presenting accurate information and revising all the past information to conform to consistent and reliable benchmarks across time is a positive and long overdue start.

See by John Williams and navigate from there.

Bumper stickers of the week:

73 percent of all statistics are made up on the fly.

Lies, Damn Lies, and Government Statistics.

Disraeli was 100 percent right.

U-6 Not U-3 Unemployment Figures.

[Mildred Loving, one of the plaintiffs who challenged the miscegenation law in Virginia, died today.  See the e-ssay dated March 14, 2005 entitled “’Strict Construction’ Strictly Construed.”]

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