Dear Reader,
“Voters were right about the economy. The data was wrong.”
Here you have the studied conclusion of Mr. Eugene Ludwig.
Mr. Ludwig captains the eponymous Ludwig Institute for Shared Economic Prosperity. From 1993-1998 he bore the title, United States Comptroller of the Currency.
His vast experience equips him to separate true data from false data.
Thus he is able to penetrate the dense statistical fogs — the statistical fogs in which government cloaks economic data.
Prior to the election the Biden administration’s data-deceptionists assured us that economic conditions were hale… and economic conditions were hearty.
Voters should therefore vote for him — and later for her — to keep the show going.
Yet voters had eyes to see, ears to hear, and hides to feel. Their direct sensory experiences presented a different reality altogether.
Sorry, You’re Not Fooling Me!
Voters suspected that government statisticians were working the fog machines. Mr. Ludwig:
- Before the presidential election, many Democrats were puzzled by the seeming disconnect between “economic reality” as reflected in various government statistics and the public’s perceptions of the economy on the ground.
- Many in Washington bristled at the public’s failure to register how strong the economy really was…
- What they rarely considered was whether something else might be responsible for the disconnect — whether, for instance, government statistics were fundamentally flawed.
- What if the numbers supporting the case for broad-based prosperity were themselves misrepresentations? What if, in fact, darker assessments of the economy were more authentically tethered to reality?
Mr. Ludwig concludes the numbers supporting the case for broad-based prosperity were themselves misrepresentations… and that darker assessments of the economy were more authentically tethered to reality.
As concluded — evidently — the American voter.
The Origins of the Statistical Fog
Whence does the government’s statistical fog originate? Mr. Ludwig:
- For decades, a small cohort of federal agencies have reported many of the same economic statistics, using fundamentally the same methodology or relying on the same sources, at the same appointed times. Rarely has anyone ever asked whether the figures they release hew to reality.
Well friends, this Ludwig fellow has asked whether the figures they release hew to reality.
Here is his answer:
- For 20 years or more, voter perception was more reflective of reality than the incumbent statistics.
Were the voters simply better informed than the fog-fanners? Did they have the mess-level view invisible to headquarters?
The answer is no. The latter had a reasonable handle of the pure, unadulterated data.
Yet they refused to take it as they found it.
They instead proceeded to run it through their scrubbers, to give it a good working-over.
The output that emerged resembled very little the original input.
Grade A material went in through the front end… trash came out the back end.
Statistical Filters
Mr. Ludwig:
- Our research revealed that the data collected by the various agencies is largely accurate. Moreover, the people staffing those agencies are talented and well-intentioned. But the filters used to compute the headline statistics are flawed. As a result, they paint a much rosier picture of reality than bears out on the ground.
You request an example. An example, then, you will have.
Mr. Ludwig would refer you first to the unemployment data:
- Take, as a particularly egregious example, what is perhaps the most widely reported economic indicator: unemployment. Known to experts as the U-3, the number misleads in several ways.
- First, it counts as employed the millions of people who are unwillingly under-employed — that is, people who, for example, work only a few hours each week while searching for a full-time job.
- Second, it does not take into account many Americans who have been so discouraged that they are no longer trying to get a job. Finally, the prevailing statistic does not account for the meagerness of any individual’s income.
- Thus you could be homeless on the streets, making an intermittent income and functionally incapable of keeping your family fed, and the government would still count you as “employed.”
Is such a man well and truly employed?
Then a hamster frantic upon a wheel is well and truly employed.
“Look,” says the government statistician, “he’s working.”
And he is working, it is true. Yet he runs and runs and goes nowhere. What kind of work is this?
Yet the distinction is obscured in statistical fog.
Statistical Fog in Action
Consider:
November unemployment — official November unemployment — ran to a grand and gorgeous 4.2%.
Yet what do we discover if we scatter the statistical fog… and drive a spotlight through the actual data, Mr. Ludwig?
- If you filter the statistic to include as unemployed people who can’t find anything but part-time work or who make a poverty wage (roughly $25,000), the percentage is actually 23.7 percent. In other words, nearly one of every four workers is functionally unemployed in America today — hardly something to celebrate.
Nearly one in four workers is functionally unemployed in America today!
How do you like it?
Yet what inquest into government fog production is complete without inclusion of inflation?
Blinding Fog
On inflation the fog machines are uniquely and powerfully focused:
- Democrats spent much of the campaign pointing out that inflation had abated by Election Day, even if prices remained elevated from pre-pandemic levels. Moreover, many noted that wages had risen at a faster clip.
- These claims were based on observations drawn largely from the Consumer Price Index, an indicator that tracks the prices charged for 80,000 goods and services across the economy.
At this point the fog machines spring to action:
- Those with modest incomes purchase only a fraction of the 80,000 goods the CPI tracks, spending a much greater share of their earnings on basics like groceries, health care and rent. And that, of course, affects the overall figure:
- If prices for eggs, insurance premiums and studio apartment leases rise at a faster clip than those of luxury goods and second homes, the CPI underestimates the impact of inflation on the bulk of Americans. That, of course, is exactly what has happened.
Please, sir, elaborate:
- My colleagues and I have modeled an alternative indicator, one that excludes many of the items that only the well-off tend to purchase — and tend to have more stable prices over time — and focuses on the measurements of prices charged for basic necessities, the goods and services that lower- and middle-income families typically can’t avoid…
- Our alternative indicator reveals that, since 2001, the cost of living for Americans with modest incomes has risen 35 percent faster than the CPI. Put another way: The resources required simply to maintain the same working-class lifestyle over the last two decades have risen much more dramatically than we’ve been led to believe.
The Human Hamster
I referred above to the hamster running vainly and fruitlessly upon the wheel.
Here you have the human hamster in the identical situation.
No, the human hamster finds himself in the inferior situation.
He runs not in place — but falls backward.
The government statistician blinds you to this grim reality.
I recently called upon President Trump to terminate government statisticians.
Today I submit once again my humble yet earnest request.
We have had enough fog. What we require is light.
We may not like what we see — yet at least we know it is real.
Regards,
Brian Maher
for Freedom Financial News
