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David Stockman: The statistics coming out of the BLS and BEA are "The Economists' Truman Show"
Writing in the Wall Street Examiner on February 5, Bruce Krasting and David Stockman (President Reagan's budget director) discussed the sudden fall in the labor force participation rate reported by the Bureau of Labor Statistics (BLS) in January. A full 1.177 million people who might otherwise have been considered as unemployed were reclassified as having dropped out of the labor force in a single month.
The BLS is not trying to hide their sudden change in the labor force participation rate, they discuss it in a table at the bottom of their press release. But with the exception of the business press, the mainstream press publishes the headline data that the BEA puts at the top of the press release and they ignore the rest.
Stockman calls the statistics coming out of the BLS and BEA (Bureau of Economic Analysis), "the economists' Truman Show." He writes:
Stockman is being unfair to the BEA, a branch of the Commerce Department. I haven't seen any attempt by them to portray their data in a false light. The BLS, a branch of the Labor Department, is the sole culprit here.
My father has been arguing on this website for weeks that the press should report the actual jobless claims data, published weekly by the BLS, because the headlined seasonal adjustment data is hiding the real trends. Earlier this week, I cited a Wells Fargo website pointing out that the January employment data, published by the BLS, was skewed by a seasonal adjustment which was not applicable due to the warm January weather. Now we know that the BLS is also massaging the announced unemployment rate by juggling the labor force participation rate numbers.
In the Truman Show movie, Truman finally breaks out and discovers that he had been living his whole life on the set of a television reality show. These days, the BLS is trying to manufacture a recovery with phony good news headlines. The real truth can be discovered in the footnotes, in the revisions to previous periods, and in the actual raw data. In a nutshell, it shows that the American economy is stagnating at the moment.
Comment by Steven, 2/15/2012: You are right about the reports, I don't think any serious person trusts the headlines, we have learned to read the fine print. The media circus is just political bubble gum for the unwashed to chew on. But where is the solution? Balanced trade won't come by itself, the Congress must act on it. A good act of Congress? Hasn't happened in quite a while...
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