I’ve commented before on how the government has changed its methods over the years for calculating the economic stats, to make itself look better.
For example, consumer price inflation has been running about 8-9% per year under the 1980 method. I don’t claim the 1980 method is right; but the government claims only 1% CP inflation from its newer methods, and that number violates many people’s first-hand experience of rising prices and declining living standards.
Or with unemployment: by 1930s methods, it has been running 15-20%, which means we are already in the Great Depression 2.0. Again, I don’t view the older method as sacred; but that number fits many people’s experience better (as they have been forced into permanent unemployment, part-time work, etc.) than the government’s claim of 7.4% unemployment.
The people who change the statistical methods always have excellent-sounding reasons. There’s just one problem. Their changes always run in one direction, to make the government look better.
Somehow, they never adopt changes that could make things look worse. The latest example is GDP (Gross Domestic Product). Last week, the government published new data from new formulas for calculating GDP.
Guess what? The changes make the government look better. Suddenly, America’s GDP is supposed to be $550 billion higher. Which improves America’s debt-to-GDP ratio magically; that is, even though nothing has changed in reality.
But some of the changes they made are unreal, almost too silly to believe. The first ZH link above provides neutral-sounding descriptions from Bloomberg. Peter Schiff gave clearer and more colorful descriptions, in a preview back in April: [Read more…]