03-19-2017: Unemployment, Inflation and Other Inconvenient Stats

Posted: March 19, 2017 in Connect The Dots
Tags: , , , , , , , , , ,

Lying by the numbers!!!  When politicians we elect, and pay a great deal of money to for representing the world’s transnational monopolies in D.C.,  instead of we the people, lie to us about how great our economy is; we should at least have some idea how clever the lies are – because for one thing, there’s a lot of ’em.  For another, if you’re not prepared you could get robbed.  If you’re in the House or Senate your insider trading rights are worth a fortune.  We the people at least in our own minds, deserve a good honest lie from you, put together with reasonable care, little disclosure and some attitude.  After all, we the people are paying for it… and paying dearly.  At least provide us a good show.  P.T. Barnum always provided a good show and your D.C. circus tradition should stand tall and proud on the midway.

OFFICIAL UNEMPLOYMENT STATISTICS?
The U-3.  Good statistic or crappy lie?

The U.S. Bureau of Labor Statistics (BLS) tracks six different metrics for unemployment.  When looking at unemployment reports the viewer should be aware of the metric or metrics being included for reporting purposes as these so-called official reports are regularly employed (pun intended) for propaganda purposes rather than information dissemination or put another way; obfuscation, not clarification.

The six BLS unemployment metrics are:

 (See https://www.bls.gov/lau/stalt.htm for 2016 Annual Averages.)

*****
U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force.  2016 U-1: 2.0%

U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force.  2016 U-2:  2.3%

U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate).  2016 U-3:  4.9%

U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers.  2016 U-4:  5.2%

U-5 Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force.  2016 U-5:  5.9%

U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.  2016 U-6:  9.6%
*****

The vigilant receiver of .gov unemployment statistics will carefully consider the specified parameters (identified on the BLS website) of what is or isn’t included within each of the U-1 through U-6 metrics – particularly the popular U-3.

U-3 is the officially published unemployment percentage regularly given out by the Federal government and echoed across our largely uninformed nation by CIA compromised, fake news bureaus.  U-3 is a real number, but hardly reflects unemployment levels across Main Street America.

To grasp actual Main Street unemployment levels, economist John Williams, of ShadowStats Alternative Unemployment Rate (See http://www.shadowstats.com/) fame suggests the BLS’ highest metric, the U-6 category is still not an accurate indicator of real life unemployment conditions.  U-6 doesn’t consider those individuals unemployed, who have given up looking for work after more than 12 months of searching.  Mr. Williams says to obtain a realistic estimate of Main Street unemployment, add the BLS U-6 figure  (obtain from https://www.bls.gov/lau/stalt.htm) to the long term unemployed (more than one year, (see https://www.bls.gov/news.release/empsit.t12.htm) who quit looking for work, but still list themselves as unemployed.

If we take the BLS 2016 Average Annual U-6 rate of 9.6% and add to it the BLS February 2017 percentage of unemployed for 15 weeks to 26 weeks, that is, 14%; we obtain a more realistic Main Street unemployment rate for February 2017 of 23.6%.  This seems about what we see in my Arizona neighborhood.  I hope yours is better.  Note that in the interest of conservatism, I only went so far as 15 to 26 weeks at 14% per BLS.  The over 27 week stat is 23.8%, which corresponds more closely with the 63% labor participation rate published by BLS.

The above 1600 Watch, 23.6% unemployment estimate corresponds fairly well to the February 2017 BLS labor participation rate of 63%, which indicates 37% of American workers are not working.  When more than 90 million working age Americans are not working and the U.S. population is roughly 313 million (not all workers, of course), the unemployment rate is not below 5%.  This official government figure, the current U-3 of 4.9% is pure political obfuscation.

Another doozy is the calculated OFFICIAL RATE OF INFLATION.

OFFICIAL RATE OF INFLATION STATISTICS?
Valid information or just another crappy lie?

A cynical person might suggest our government intentionally MIS-calculates inflation rates as low as possible to avoid adding COST OF LIVING ADJUSTMENTS to beneficiaries of programs like Social Security.  How do they do this we may inquire?

Rate of inflation, say over the past year is a simple calculation.  Take last year’s Consumer Price Index (CPI), call it P1; subtract it from this year’s CPI, call it P2; divide the difference by P1 as the basis; and multiply by 100 to obtain a percentage.  It looks like this: ((P2 – P1)/P1) x 100 = Rate of Inflation for the past year.

Example, where: P1 = 104; P2 = 106:  ((106-104)/104) x 100 = 1.92% inflation for the year

Obviously, if we vary the inputs used in each time period, rather than holding them constant as they were originally; the calculated inflation rate for the period in question can easily and predictably be manipulated up or down.  Let politics be the judge.

The CPI is a bit more complicated and that’s where the inflation rate magick happens.  Statistical data are easily altered by varying inputs.  If not careful; garbage in; garbage out as they say.  If interested in an educated tome on this subject of CPI, I suggest perusing the following paper:  http://file.scirp.org/pdf/ME20100200005_38971786.pdf.  Take a look and you’ll quickly  grasp why I’ve not included equations for CPI calc’s.

For the rest of us civilians, let’s just understand that by including or not including certain items or by changing entirely those items included or not included, we can conveniently manipulate the data.  For instance:  using an example recently provided by Mr. Paul Craig Roberts (See http://www.paulcraigroberts.org/), let’s imagine the price variation for an expensive cut of steak to be included in the CPI calculation.  Let’s imagine that price has risen significantly over the past year.  Therefore, including this price change in the data set will contribute to an increase in the calculated CPI.  Ouch!  We don’t want that.  It sounds bad if you’re a politician.  So, let’s revise the way CPI is calculated.  Let’s lie to we the people.  Isn’t that what we politicos and bureaucrats are paid to do by the big important monopolies anyway?  Absolutely, and the voting booth proves it.

Just dump that expensive cut of meat from the index and substitute a less expensive cut having a much less significant price increase – or better, no increase.  Voila!  Problem solved.  Now we’ve taken a time honored, economic benchmark and reduced it to meaningless nonsense.  If I’m not mistaken, this is exactly what BLS has done using what many refer to as Greenspan’s “substitution theory”, now added to by the “Chained CPI” concept – none of which I really care to understand, other than to know we’re being lied to on Main Street.

Magickly, our economy looks great no matter how loud that flushing noise is getting; and we the corrupt thugs can be re-elected by we the people and keep on keepin’ on shillin’ for the world’s greediest transnational monopolies and our lucrative inside trading deals.  Ain’t it great?

Just sayin’.  Citizen beware if you dare!

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