Behind the need to increasingly lie about the economic condition of the country is the dying economy. … Real weekly wages are below where they were in the late 1960s. Most people are unaware of this because government chooses to hide it.

 

By Monty Pelerin

 

As we near the end point, the point where the economy collapses, government becomes more desperate to convey the myth of a recovery. Government data have always been suspect because of the political ramifications of a good vs. bad economic report. Fudging the numbers, or at least the ways of measuring various statistics, likely began once government began issuing economic data. The propaganda value of such data began to increase under Kennedy. Now we have reached a point where manipulation is beyond anything the manipulators dared just a couple of decades ago.

Behind the need to increasingly lie about the economic condition of the country is the dying economy. If that is too strong for you to accept, then the declining standard of living. Real weekly wages are below where they were in the late 1960s. Most people are unaware of this because government chooses to hide it. Instead, they shift to median family income without adjusting for the fact that two wage earners are now required per household where one was sufficient in the past. The tricks and deceptions are too numerous to discuss, although anyone interested should go to www.shadowstats.com for a history of the manipulations and the cumulative effects across a broad series of data.

The latest example of manipulated statistics is the recent GDP report which came in at a disappointing 2.2% growth for last quarter. Without getting too technical, GDP is measured in nominal terms and then adjusted down for inflation. The lower the rate of inflation assumed, all else equal, the higher the real reported GDP. The inflation estimate is known as the “GDP deflator,” By understating this number, real GDP can be made to appear larger than it really is. There are many who believe that even the anemic real GDP numbers reported are overstated.

Mish is particularly condemning in his interpretation:

Three years into a recovery, growth (if you believe preposterous deflators) is a mere 2.2% but only 0% if you don’t. Moreover, with parts of Europe in an outright depression, with even Germany and the UK in recession, and with China slowing significantly, the odds the US economy decouples for too much longer is now approaching zero.

Government declared the recession over a couple of years ago. All other recessions ended with recoveries where quarterly real growth estimates were in the 6 – 8% ranges. We have seen nothing approaching these figures and now we see anemic figures even with apparent manipulation.

No one knows for sure how much government is manipulating the data it issues. Suffice to say that the burden of credibility continues to mount against their numbers and their claims. Clearly politicians have motives to make things seem better. They are not known for their ethics and lying is a routine part of their strategy.

If there were a real recovery there would be no need to manipulate numbers. Now, even with what seems blatant manipulation, the results are still dismal. The charade is getting old, the promoters appear to be getting desperate and the wiggle room for manipulation keeps shrinking. Soon it will become to embarrassing to continue the charade. That time will likely occur after November.

 

“Monty Pelerin” is a pseudonym derived from The Mont Pelerin Society. The writer has no connection with the Society (other than coincidence of philosophy). Nothing said by me should be considered to be representative of the views of the Mont Pelerin Society or any of its members. “Monty Pelerin”  blogs at Monty Pelerin’s World

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