The next regular Commentary: is scheduled for Friday, December 20th, covering the second revision and third estimate of third-quarter GDP, November existing home sales, and changes in Fed policy. For detail on pending economic releases, see the schedule. (LAST UPDATED December 18th.)
No. 582: November Industrial Production, Producer Price Index (PPI)
December 16th, 2013
• Strong Monthly Production Was in the Context of Slowing Annual Growth
• Despite Being a Coincident Indicator to GDP, Headline Production Just Topped Pre-Recession High for First Time, Lagging GDP by 11 Quarters
• Corrected for Understated Inflation, Production Has Not Recovered
• Producer Price Index Decline Reflected Lower Energy Prices More ...
No. 580: November Labor Data and M3, October Household Income
December 6th, 2013
• Real Household Income Falls Slightly in October, Remaining Near Cycle-Low
• Shutdown Effects on October Labor Data, and Misreporting of Same, Are More than Reversed in Headline November Numbers
• Resulting Seasonal-Factor Distortions Weigh Heavily on Data Significance; Current Headline Labor Numbers Have Little Meaning
• November Unemployment: 7.0% (U.3), 13.2% (U.6), 23.2% (ShadowStats) More ...
No. 579: First Revision to Third-Quarter 2013 GDP
December 5th, 2013
• “Booming” GDP Growth Not Reflected in Any Other Major Economic Indicator
• Involuntary Inventory Build-Up Spiked GDP Revision; Final Sales (GDP Less Inventory Change) Growth Revised to 1.9% from 2.0%
• Revised Headline Growth in Third-Quarter GDP Was Reported at 3.6%; GNP Was 3.9%; But GDI (the Theoretical GDP Equivalent) Was 1.4%
• Another Set of GDP Revisions in Two Weeks More ...
No. 578: Trade Deficit, Construction Spending, New Home Sales
December 4th, 2013
• No Signs of a Growing Economy
• Intensifying Weakness in Revised Third-Quarter Trade and Construction Data Should Soften Third-Quarter GDP Growth
• Construction Spending Falters Despite Statistically-Insignificant October Gain
• New Home Sales Monthly Data Are Nonsense, Extreme Volatility and Revisions Leave Monthly Changes Meaningless More ...
No. 575: Economic Review, October PPI
November 21st, 2013
• October PPI Was Hit by Lower Energy Costs
• Imminent Official Recession Signaled by New Leading Indicator
• Broad Economy Never Recovered from Prior Downturn More ...
Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences? The problem lies in biased and often-manipulated government reporting.
Primers on Government Economic Reports
What you've suspected but were afraid to ask. The story behind unemployment, the Federal Deficit, CPI, GDP.
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Some Biographical & Additional Background Information
Walter J. "John" Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies.
Although I am known formally as Walter J. Williams, my friends call me “John.” For 30 years, I have been a private consulting economist and, out of necessity, had to become a specialist in government economic reporting.
One of my early clients was a large manufacturer of commercial airplanes, who had developed an econometric model for predicting revenue passenger miles. The level of revenue passenger miles was their primary sales forecasting tool, and the model was heavily dependent on the GNP (now GDP) as reported by the Department of Commerce. Suddenly, their model stopped working, and they asked me if I could fix it. I realized the GNP numbers were faulty, corrected them for my client (official reporting was similarly revised a couple of years later) and the model worked again, at least for a while, until GNP methodological changes eventually made the underlying data worthless.
That began a lengthy process of exploring the history and nature of economic reporting and in interviewing key people involved in the process from the early days of government reporting through the present. For a number of years I conducted surveys among business economists as to the quality of government statistics (the vast majority thought it was pretty bad), and my results led to front page stories in 1989 in the New York Times and Investors Daily (now Investors Business Daily), considerable coverage in the broadcast media and a joint meeting with representatives of all the government's statistical agencies.
Nonetheless, the quality of government reporting has deteriorated sharply in the last couple of decades. Reporting problems have included methodological changes to economic reporting that have pushed headline economic and inflation results out of the realm of real-world or common experience.
Over the decades, well in excess of 1,000 presentations have been given on the economic outlook, or on approaches to analyzing economic data, to clients—large and small—including talks with members of the business, banking, government, press, academic, brokerage and investment communities. I also have provided testimony before Congress (details here).
An old friend—the late-Doug Gillespie—asked me some years back to write a series of articles on the quality of government statistics. The response to those writings (the Primer Series available at the top-center of this page) was so strong that we started ShadowStats.com (Shadow Government Statistics) in 2004. The newsletter is published as part of my economic consulting services. — John Williams