In the ’70’s inflation was so high that the people’s incomes were being eroded on a daily basis. In addition to wage and price controls, initiated in 1971 and later removed due to no positive effect and dramatic increases in interest rates, the Bureau of Labor Statistics (BLS) decided to redirect people’s attentions. No longer would inflation measurement contain the dreaded food and energy, both of which were running rampant. Everything else would be included and it all would be designated Core Inflation. If we weren’t told the truth at least we would feel better as we sunk into the inflationary abyss.
In 2013, the National Bureau of Economic Research (BEA), concerned that so-called recovery was not on track, decided to REVISE the figures to “include new measures and data to better capture the U.S.economy”. The BEA Director said that the revisions were to keep the GDP “up to date and relevant”. Miraculously, thanks to recalculating R&D, entertainment and promises made for pensions, our GDP rates increased by some 10%.
“2 + 2 is what?” the government official was asked.
“What do you want it to be?” he answered.
Now comes the BLS’s most recent report on jobs for January 2015. 257,000 reported new jobs smashed expectations. Excitement abounds as the recovery continues unabated.
However, much like the problems of inflation in the ’70s and slowing GDP in 2012, another problem arose unexpectedly.
The sharp plunge in crude oil and the resultant pink slipping of thousands of energy patch workers created a problem for the enthusiastic BLS. Bloomberg reported 18,000 terminations for January where as Challenger, Gray and Christmas said 21,000 jobs had been lost.
The poor BLS. What to do? What to do?
Of course, roll out the old seasonal adjustment
BLS: # of oil and gas extraction workers -1,900.
That magically makes 16,000-18,000 out of work – but not unemployed just seasonally adjusted.
It would seem that many, including the mainstream media, continued to drink the kool-aid every first Friday of every new month. I was reminded, by one believing progressive, that the BLS and BEA have been calculating this way since their inception, and therefore, questioning the numbers is tantamount to being almost unpatriotic. I would not disagree, except the patriotic part of course. They have been calculating the same way for decades which brings credibility to the old adage:
Figures can lie and liars can figure.