Our economy in North America depends to a great extent on official statistics, for the most part those published by the United States government. It is strange that so far there has been little public cynicism about those figures. An assessment of them is long overdue; they routinely are not very meaningful.
Government departments produce most of those numbers in-house. It is only a matter of time before distrust of this published information becomes wide-spread. People should realize that official figures are produced with political interference. Still, what people make of this data is amazing.
For example, Washington announced recently that the core rate of inflation, that is excluding food and energy, rose only one-tenth of a per cent, less than the two-tenths of a per cent that most assumed. Before the stock market opened, the chatter was that the financial markets would soar on that good news, which, in fact, they did. Does any sensible person really believe that one can accurately measure inflation that precisely?
Then the official inflation rate has been fiddled, excluding the cost of new houses and replacing that with rental rates. If the price of some goods has climbed, statisticians are free to substitute them with a comparable product. Thus, if the price of oranges has risen significantly, then the price of say apples, replaces that item. It has been estimated by reputable economists, that the American inflation rate is over 5 per cent, not the 2 to 3 percent reported.
The official count of job creation has been changed repeatedly, frequently going back several months. Anyway, how can any group come up with a total in an economy as vast as that?
Nowadays government departments have some flexibility in choosing good days for burying bad news. Official data on government revenues almost always are subject to revision later on. In Canada, projections of budget surpluses are underestimated, in order to rationalize some spending restraints.
Government officials will continue to see figures long before they are made public, and have plenty of time to pick out the most flattering features and craft a message for public consumption.
Then too, officials have a say in what words are wrapped around the numbers – the only bit that most people read. What the Governor of the Bank of Canada or the Federal Reserve Board chairman says often will emphasize the policy that person wishes to promote.
What is disconcerting is the material that never is revealed. In the United States, comprehensive information on money supply has been discontinued. The real change in the price of goods is disguised, as cited above. Too, it is claimed that product improvement means that even price increases are not counted as one is getting much more “bank for the buck.”
Now it is up to the public to demand more dependable and complete information.
