Kitco Commentaries - Tom Dyson: "To be a successful economist, you have to use government statistics. Government stats are an economist’s bread and butter. The thing is, according to Williams, you can’t take them at face value. Governments massage their statistics for political reasons. So in order to make accurate predictions, you have to know how the government puts its numbers together.
John Williams has dedicated twenty-five years to this dismal task.
“The longer I’ve looked at the numbers and the statistical series as they’ve evolved over the decades, the more that I’ve started finding things in the numbers that most people do not see.”
What has happened over time is that the methodologies employed to create the widely followed series… such as GDP, the CPI and the employment numbers, all have had biases built into them that result in overstating economic growth and understating inflation.
Real unemployment right now – figured the way that the average person thinks about unemployment, meaning figured the way it was estimated back during the great depression – is running about 12%. Real CPI right now is running about 8% And real GDP probably is in contraction.”
Williams says these adjustments occurred in very tiny steps over the years. As far as he’s aware, the first major adjustment was made during the Kennedy administration when they stripped out discouraged job seekers from the unemployment statistics. Adjustments have showed up in every administration since.
The Consumer Price Index gives a good example. “All in all, if you want to peel back changes that were made in the CPI going back to the Carter years, you’d see that the CPI would now be 3.5% to 4% higher. The difference that it makes is significant: if t"
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