Bloomberg reports:
The way some parts of U.S. gross domestic product (GDP) are calculated are about to change in the wake of the debate over persistently depressed first-quarter growth.
In a blog post published Friday, the Bureau of Economic Analysis listed a series of alterations it will make in seasonally adjusting data used to calculate economic growth. The changes will be implemented with the release of the initial second-quarter GDP estimate on July 30, the BEA said.
Although the agency adjusts its figures for seasonal variations, growth in any given first quarter still tends to be weaker than in the remaining three, economists have found, a sign there may be some bias in the data. It's a phenomenon economists call "residual seasonality."
ZeroHedge reports:
In other words, as of July 30, the Q1 GDP which will have seen its final print at -1% or worse, will be revised to roughly +1.8%, just to give the Fed the "credibility" to proceed with a September rate hike which means we can now safely assume not even the Fed will launch a "hiking cycle" at a time when the first half GDP will print negative (assuming the Atlanta Fed's 0.7% Q2 GDP estimate is even modestly accurate).
Will abnormally "good" data be revised lower, or whether labor market data, which is already manipulated beyond comparison by the BLS will also be adjusted due to "residual seasonality"? Don't hold your breath.
(Score: 2) by jmorris on Monday May 25 2015, @05:09AM
Come on. While the analysis here is pretty good, as a general rule ZH is a wierd mismash of Negative Nancyism, sarcasm, comic relief and pro Russian propaganda. Not saying I don't check it every day or so for the lulz, but if you are taking it as a serious news source I pity ya. You probably haunt InfoWars, WND, HuffPo, Vox and other less than credible sources too.
I wouldn't have said anything, since they are on target for a change, but this isn't the first time in recent memory for em to get linked.
(Score: 4, Insightful) by frojack on Monday May 25 2015, @08:44AM
Yeah, I pretty much agree. Any rational story that comes from that site is bound to be a some sort of troll. But if it sounds over the top leftist corporate hate rage, you can bet it will pop up here on SN the minute gewg_ wakes up.
GDP calc is noe and has not been consistent over the decades. It sll just a huge estimator, of very little scientific rigor, used to answer questions that are largely un-answerable (How is the economy doing?) from people that don't want to even look at how that particular sausage is made. Even for a country the size of Great Britain or France, this is an unanswerable question.
Tweaking the formula to allow for (hide) seasonality is just another layer of guesswork, on a foundation of incomplete measurements. And for what?
Making decisions later in the year? Adjusting the way you compute it so that numbers come out similar to later quarter if all other things were equal sort of ignores the fact that all things aren't equal.
There is a lot of production that just can't happen in the winter.
No, you are mistaken. I've always had this sig.
(Score: 2) by VLM on Monday May 25 2015, @11:57AM
There is a lot of production that just can't happen in the winter.
also demand destruction from holiday buying binges, legendary low real estate sales in the winter leading to low demand for everything housing related so even if you can build houses (like in the deep south) there's no demand at that time of year. "naturally" production will be lower because of demand slump unless the producer is trying to build up an inventory (LOL just in time).
(Score: 2) by Reziac on Tuesday May 26 2015, @02:29AM
Sounds more like cooking the books to me... things don't look so rosy, so lets find a way to make it look better, just like when services got added to GDP some years back, despite that services are a cost that doesn't create anything.
And there is no Alkibiades to come back and save us from ourselves.
(Score: 5, Insightful) by VLM on Monday May 25 2015, @12:08PM
My analysis of ZH is its kind of like that old saying about democracy, it really sucks but all the alternatives are even worse.
The alternatives are a handful of megacorporation owned, corporate advertiser supported, government boot licking propaganda outlets that are so shameless they'd embarrass a Pravda editor from the 80s, which starts making ZH ravings and rantings look much better.
Another way to put it, is ZH looks like shite, and it takes a lot of work but the Times and the fedgov and CNBC do a lot of work to make ZH look comparatively better. I mean, you just can't take mainstream stuff seriously anymore, or if you do, its a recipe to lose your shirt in the markets.
A large part of it is the corruption of the existing system. Naturally thats going to lower the bar until almost anything is better on average, so some of the ZH stuff is pretty stinky; yet simultaneously less stinky than the alternative.
Or yet another way to put it is probably 50% of it is crap but its competing in a market where the standard is 90% crap.
(Score: 3, Interesting) by VLM on Monday May 25 2015, @06:10PM
Here's a great quote of two paragraphs from one ZH post today toward the end of a post discussing two recent stupid movie releases:
Memorial Day is a dreary moment to have to face this onrushing calamity of rocket-propelled medievalism rampant — all those poor American soldiers blown up and mangled the past twelve years. It’s also interesting that the news media is totally out-of-touch with the biggest prize on the great gameboard: Saudi Arabia. You think ISIS overrunning Iraq is bad news? Wait until the ordnance starts flying around Riyadh. Notice, too, that there’s no news coming out of Yemen on the base of the Arabian peninsula, a failed state with a population nearly equal to its neighbor. If we have any idea what’s going on there — and surely the Pentagon and NSA do — then it’s not for popular consumption.
This is ironic because if the trouble happens to spread into Saudi Arabia — and I don’t see how it will not — then we’ll find out in a New York minute how America’s future is not about monster trucks, cars, dirt bikes, holograms, phone apps, and all the other ridiculous preoccupations of the moment.
(Score: 1) by KGIII on Monday May 25 2015, @05:25PM
That is why I get all my news from TalkingPointsMemo and Pravda. Yes, all of it... </sarcasm>
"So long and thanks for all the fish."
(Score: 2) by istartedi on Monday May 25 2015, @10:01PM
I keep waiting for ZH to go off-line. You know that the very next day, the dollar will collapse, revolution will break out, and Obama will pull off his rubber latex mask to reveal the lizard underneath.
Appended to the end of comments you post. Max: 120 chars.
(Score: 5, Insightful) by Mr Big in the Pants on Monday May 25 2015, @05:10AM
If at first you don't succeed, redefine success!
(Score: 5, Informative) by Runaway1956 on Monday May 25 2015, @05:14AM
This is what happened with unemployment statistics. The administrations (note the plural form of the word) didn't like reporting that unemployment was over 10%, so they altered the methods used to compute unemployment.
Of course, with sites like shadowstats.com it is easy for anyone to check the REAL unemployment rate - which is hovering at 23%.
It's a time honored tradition for governments to just change the numbers whenever they feel like it. Today, we want positive GDP numbers for the first quarter of the year, so we're going to make them positive. It's as simple as that, people!
(Score: 3, Insightful) by captain normal on Monday May 25 2015, @05:59AM
Of course , just like the US Gov. calculates "cost of living". Don't like the way it looks, just include the cost of things you don't need to live. Like electronics from China, or cheap housewares or appliances from China. Meanwhile, the things that one needs to live like costs of food, housing, heating and cooking fuel keep shooting up.
When life isn't going right, go left.
(Score: 2) by VLM on Monday May 25 2015, @11:59AM
Humorously the mantra they recite WRT their weird selection of products was all those household goods are made at the factory down the road so the employee income kind of corrects for the mistakes in goods selection. Oh wait all those jobs went offshore 20 years ago. Whoops.
(Score: 0) by Anonymous Coward on Monday May 25 2015, @08:31AM
(Score: 3, Interesting) by Non Sequor on Monday May 25 2015, @01:36PM
ShadowStats is garbage.
http://azizonomics.com/2013/06/01/the-trouble-with-shadowstats/ [azizonomics.com]
Write your congressman. Tell him he sucks.
(Score: 2) by Runaway1956 on Monday May 25 2015, @02:14PM
I notice that Mr. Aziz attacks the inflation charts, but doesn't bother to analyze any of the other Shadowstats figures. Perhaps Aziz is correct - Shadowstats simply attaches some constant to the government's figures, and inflates the figures with that constant.
Or - alternatively - the government is using it's own constant to under report the real inflation?
You'll have to do a little better than Aziz' article to convince me that Shadowstats is garbage. Got anything more?
BTW - I have read the article you cite before, and simply dismissed it as sour grapes.
(Score: 2) by Non Sequor on Monday May 25 2015, @09:42PM
I spent the last two weekends working on a side project that involved wading through the published microdata for the last eight years of BLS consumer expenditures surveys. The data's complex and it has some noise in it, but overall it's well maintained and is consistent with the published figures. I also note that the data implies that retirees balance expenditures to their income, which is a harder result to fake without creating inconsistencies with other information.
I haven't tried to reproduce the CPI methodology, but I was able to match key figures in the BLS consumer expenditures report and I was able to see the methodology details that explained the remaining differences. There isn't a hidden government fudge factor which disappears when you process the data directly.
Do I believe that inflation methodologies are oversimplified and may over or understate the impact of certain types of expenses on people's standard of living and that other metrics might be useful for looking at these issues? Yes. Do I think ShadowStats accomplishes anything like that by fudging a number that is derived from an externally consistent dataset? No.
Write your congressman. Tell him he sucks.
(Score: 0) by Anonymous Coward on Monday May 25 2015, @06:38PM
The thing with inflation is it *depends* on what you are talking about.
For example if you talk about cars it is pretty clear there is inflation. In the year 2000 I could buy a nice bmw for about 32k. The same car today would be 50-60k. Yet a gallon of milk is about the same price.
This also varies wildly from region to region and item to item.
The only way to get a 'true' inflation rate is to put every good in there. Yet the numbers are cherry picked. They are manipulated by definition of how they gather the data.
For unemployment I look at total employment. It includes people who are not even going to look. But that is OK. As I know the population is growing so therefore on average it should grow too. Yet overall it is falling vs the size of the population.
These scorecard numbers are meant to be talking points the 5oclock news. As our money is built on trust.
(Score: 1, Interesting) by Anonymous Coward on Monday May 25 2015, @06:04AM
You know what? Ask John Nash.
Wait... ah, so that's why they killed him, you thought is a coincidence?
(Score: 2, Interesting) by DECbot on Monday May 25 2015, @06:11AM
That's just what they want you to think.
cats~$ sudo chown -R us /home/base
(Score: 0) by Anonymous Coward on Monday May 25 2015, @09:58AM
Govs need to stop playing games with numbers. There are some points where you cannot deny "We are all in this together". The games are preventing cures for cancer and other diseases by messing with denominators.
(Score: 0) by Anonymous Coward on Monday May 25 2015, @05:27PM
But we're not. Our economy is built on "Every man for himself".
(Score: 0) by Anonymous Coward on Monday May 25 2015, @03:33PM
Amazons reviews. Crappy items with a lot of negative (or low star) reviews still get a higher average rating.
(Score: 2) by tibman on Monday May 25 2015, @04:54PM
I've never seen or heard of that one before.
SN won't survive on lurkers alone. Write comments.
(Score: 3, Insightful) by Rich on Monday May 25 2015, @05:11PM
I've never understood why GDP as a metric is such a fetish. Measuring progress by it credits each and every senseless waste of effort as unequivocally good. (cf "Broken Window Fallacy"). It's a bit like if I'm finished with work at 5 pm, I'd smash a window of my house, head to the DIY store, buy a new one, fix the broken window until 8 pm and say. "Wow. That's great! Did so much more than yesterday, so I'm way better off. But hey, there's still time left 'til midnight, I'm gonna smash it TWICE tomorrow, for the sake of growth."
A balance sheet, to see what was gained or lost at the end of the day is much more useful to me, and I would imagine, to a nation as well. Of course that would raise questions how to tag a value on "being well", but that certainly wouldn't introduce more error to the overall metric than counting mindless waste as good, would it?
Any macroscopic economic expert care to explain?
(Score: 2) by bradley13 on Monday May 25 2015, @05:36PM
This is definitely a weakness of GDP as a metric. The freshly divorced guy who has a major heart attack, causing a massive accident on the highway - he has just caused a positive blip in the GDP. The fact that, in total, his actions destroyed rather that created? GDP does not capture that.
Of course, it's not as simple as discounting all of that, either. Medical science does improve quality of life, so it can be productive. But where do you draw the line - how do you measure it fairly?
That said, at least GDP has the benefit of being very simple to measure. When the government adjusts it? Well, that's like the way you tell if a politician is lying: it's because his lips are moving. When the government redefines GDP (or cost of living, or unemployment), you pretty much know that they are doing it to deceive the public.
For anyone who doesn't know about it, be sure to visit Shadow Stats [shadowstats.com].
Everyone is somebody else's weirdo.
(Score: 0) by Anonymous Coward on Monday May 25 2015, @11:40PM
I'll give you a simpler scenario.
You go dig a ditch, and then refill it, and have your buddy pay you $10.
Have your buddy dig a ditch, and then refill it, and you pay him $10.
Now GDP increased by $20.
Yeah, (macro)econ stats are like that.
(Score: 2) by No Respect on Monday May 25 2015, @08:04PM
Submissions that rely on anything posted at ZH should not be accepted here. What's next? A submission that claims the water level in Lake Meade suddenly dropped 8 feet in 36 hours after the recent Nevada earthquake?
(Score: 2) by maxwell demon on Monday May 25 2015, @08:29PM
You mean, an article about how they changed the method of determining the water level in Lake Meade, and suspiciously the water levels after employing the new method were of the same order as for the old method, which proofs that the new method was only invented to hide a change in those levels, right? :-)
The Tao of math: The numbers you can count are not the real numbers.