Mark Twain famously wrote, “There are three kinds of lies: lies, damned lies, and statistics.”
Twain attributed the quote to British Prime Minister Benjamin Disraeli, but Disraeli never used it. Other British luminaries apparently did use it, but it was Twain who made it famous.
If it were up to me I’d phrase it, “There are three kinds of lies: lies, damned lies, and BLS statistics.” The BLS is that agency of the US Labor Department that brings us the monthly reports on the CPI and jobs, including non-farm payrolls and the unemployment rate.
In compiling those reports, the Bureau surveys tiny samples of business establishments and households. It then applies all kinds of statistical manipulation to project numbers that purport to show a snapshot of the entire US economy.
I have been actively tracking this data for 19 years. I must tell you that I have not been impressed with the quality of the BLS headline numbers that the Wall Street media dutifully spins to the public. With Twain in mind, forgive me if I refer to the BLS as the Bureau of Liar Statistics.
The BLS’s biggest and longest ongoing manipulation of the truth is probably the fact that they stopped including actual US housing prices in the CPI in 1982. That’s an issue I have brought to your attention several times in these pages. Since the beginning of the recovery in housing inflation in 2012 it has resulted in the CPI being understated by about 1% point on average.
While the CPI has this built in long running fudge factor, the jobs data is manipulated in so many ways my head spins at the thought of trying to figure it all out. The just released January payrolls data may have been one of the biggest whoppers a US government economic statistical agency has ever told.
And that matters. It matters because it influences monetary policymaking. So let’s take a look at what they misrepresented…
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