Monday, September 15, 2008

How much do you believe government-compiled statistics?

The economy is worse than what government statistics are saying. That’s what this article by Kevin Philips is saying. Throughout the years, the government has repeatedly debased the formulae used to calculate widely followed statistics, such as the following:

• The monthly Consumer Price Index (CPI), which serves as the chief bellwether of inflation;
• The quarterly Gross Domestic Product (GDP), which tracks the U.S. economy's overall growth;
• The monthly unemployment figure, which for the general public is perhaps the most vivid indicator of economic health or infirmity.

Often, the gradual reformulation of the indices have been ‘minor’, and hence, have never, in each instance, been large enough to merit a large-scale pubic objection. Phillips writes: The deception arose gradually, at no stage stemming from any concerted or cynical scheme. There was no grand conspiracy, just accumulating opportunisms. Pollyanna Creep is how this gradual reformulation has come to be known among those rare few who follow these ‘footnoted’ changes.

Read the article and be aware.

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