"Shadowstats" - Real Unemployment 12%, real CPI 8%. We're in a RECESSION.

Atman

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Mon Apr-03-06 10:05 AM
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"Shadowstats" - Real Unemployment 12%, real CPI 8%. We're in a RECESSION.

Edited on Mon Apr-03-06 10:21 AM by Atman

Shadow Statistics
by Jim Sinclair

You're bombarded with all those statistics that pour out of Washington, the ones that appear to show how unemployment and inflation are low, GDP is expanding, and so on. They may not square with your personal experience, but after all, the government pays a lot of people with fancy degrees a lot of money to carefully track economic statistics. So you figure the numbers must be somewhat accurate.

But now a man has come out of the woodwork who's done the real math and properly crunched all the numbers. His conclusion: "If the numbers don't seem real to the man in the street--they probably aren't."

<snip>

Has he ever. What Williams does (and few others bother to do) is read the fine print. The government, he notes in a recent interview with Kathryn Welling of the welling@weeden investment newsletter, "is very honest in terms of disclosing what it does. It always footnotes the changes and provides all the fine details." It is in those details--no surprise--that the devil lies.

"What has happened over time," Williams says, "is that the methodologies employed to create the widely followed series, such as ... the GDP, the CPI, 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 of unemployment, meaning figured the way it was estimated back during the Great Depression--is running about 12%. Real CPI right now is running at about 8%. And the real GDP is probably in contraction. I venture that if you talked about those numbers now with the average person, they would say that they seem reasonable ... my work shows that the economic perceptions of non-professionals actually have some real validity; there are in fact reasons for the disconnect between official statistics and what the populace is feeling."

The ShadowStats Web site

Link to the article above Scroll down a few posts.

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Also, from the current edition of Gillespie's subscriber-only newsletter at ShadowStats:

• March 2006 Edition subscription required (Mar. 15)
In general, the broad economic outlook has not changed. Since the beginning of 2005 a number of key indicators have been nearing or at their fail-safe points, with four indicators moving beyond those levels, signaling a recession. Once beyond their fail-safe points, these indicators have never sent out false alarms, either for an economic boom or bust. The 2005 to 2007 inflationary recession showed signs of deepening in the latest reporting. Monthly data show plunging new orders for durable goods and contracting industrial production, retail sales, help-wanted advertising, real average weekly earnings and consumer confidence. Consumer credit growth also remained sub-par. As to inflation, both the CPI and PPI topped expectations, and oil prices have remained strong. Also published recently were the full trade data for 2005. Based on fourth-quarter GDP, net exports and employment data, the U.S. trade deficit has cost 8.8 million jobs over time, with 800,000 jobs lost in 2005, alone.

(edited for a more compelling subject line!)