Investment

» permabear - The Numbers Racket

In response to The Numbers Racket posted by Normxxx:

The numbers the government has been putting out lately have really looked almost ridiculous. How the markets can rally so decisively on numbers that really look rigged repeatedly amazes me. Listening to Bob Brinker crow once again over government numbers that support his bullish views almost make me puke.

Just a few recent examples.

Jobs: The birth/death model is used to estimate additional jobs that can't be counted by the models used. In the last report they added something like 262,000 jobs using the birth/death model. I believe it was the most ever added using this method. While the jobs number showed 20,000 lost jobs, if the birth/death model wasn't used, the number of lost jobs would have been well north of 200,000 jobs. How might the stock market have done on a day of 200,000 job losses?

Inflation: The recent CPI report last week showed a rate of .2 percent total and .1 percent core. They use seasonal adjustments to adjust the numbers based on the time of year. In the last month when food and energy prices were going through the roof, they actually showed a decline in gas prices. Hello? Did anyone on Suite 101 pay less for gas last month? And then when the focus of the media and the stock market is on the low core rate of around 2 percent a year, are these people living in the real world. Changes made to the CPI in 1983 and 1998 both adjusted down the rate that the government would show. Using preadjusted numbers inflation would be running upwards of 10 percent.

GDP: Bulls have been crowing that we haven't seen any recession because the GDP has come in at a positive .6 percent for the past two quarters. If inflation was calculated at the true rate instead of the phony 2 percent rate used by the government, we would have already seen two quarters of negative GDP growth, showing that we'd officially be in recession today. How anyone can say with a straight face that we're not in recession when we've had four straight negative job numbers (even as rigged as they already are), along with contracting industrial production, ISM, consumer confidence at 26 year lows and a housing market in depression, is beyond me.

-- posted by permabear