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PLEASE NOTE UPDATED SCHEDULE:  The Special Commentary, reviewing 2017 and a previewing 2018, has been pushed back one day to Wednesday, January 31st, post-State of the Union.  A Regular Commentary follows on Friday, February 2nd, covering January Employment and Unemployment, Annual Payroll Benchmarking, and December Construction Spending.  The full payroll-benchmarking analysis likely will go over the weekend.

No. 933: Dollar Turmoil, Fourth-Quarter GDP, New Orders, Freight Index, Home Sales Subscription required January 26th, 2018
• As the U.S. Dollar Weakens, and Gold and Oil Prices Jump, Watch Out for the Stock Market! • The Worst Trade Deficit Since 2007 Clobbered Fourth-Quarter GDP; Deteriorating Net Exports Knocked 1.13% (-1.13%) Off Quarterly Growth • Fourth- Versus Third-Quarter Real GDP Growth Slowed to 2.55% from 3.16%, with Inventory Liquidation and a Soaring Trade Deficit Offsetting Some of the Gains from Surging Defense Spending and Disaster-Boosted Demand for Goods and Structures • Net of Trade and Inventories, Fourth- Versus Third-Quarter Real GDP Growth Jumped to 4.35% from 2.01% • Better-Quality Economic Measures Still Show No Full Recovery from the Recession: U.S. Durable Goods Orders, Freight Activity and Manufacturing All Have Completed a Full Decade of No Economic Expansion • Defense Spending Boosted December Durable Goods Orders Sharply • Faltering Consumer Outlook • Foreclosures Appear to Be on the Rise, as Existing-Home Sales Sink Anew • On Top of Sharp Downside Revisions to November Home Sales, December Activity Plunged Monthly by 9.3% (-9.3%) and by 3.6% (-3.6%) for New and Existing Homes, Shy of Respective Pre-Recession Peaks by 55.0% (-55.0%) and 23.4% (-23.4%)  More ...
No. 932: December Industrial Production and Housing Starts Subscription required January 18th, 2018
• Hurricane Distortions to Economic Reporting Start to Unwind • Two-Thirds of the 0.9% Monthly Jump in December 2017 Industrial Production Reflected Unseasonably-Bad Weather Boosting Utility Usage • Full-Year 2017 Production Rose by 1.95%, Following Full-Year Annual Declines of 1.22% (-1.22%) in 2016 and 0.71% (-0.71%) in 2015 • Big Swings in Mining Activity (Oil Production) Drove Those Full-Year Changes, versus Annual Stagnation in Utilities and in the Much-Larger Manufacturing Sector, Despite a Late-2017 Manufacturing Surge for Hurricane-Damaged-Vehicle Replacement • Fourth Quarter Industrial Production Regained Its Pre-Recession Peak for a Second Time • Dominant Manufacturing Sector Held Shy of Its Pre-Recession Peak by 4.54% (-4.54%), Just Having Passed a Full 10 Years, 120 Months or 40 Quarters of Continuous Non-Expansion; Longest Period of Non-Expansion in the 100-Year History of the Production Series • In Ongoing Extreme, Monthly Volatility, December Housing Starts Plunged by 8.2% (-8.2%), Reflecting Some Negative Catch Up, as Hurricane-Distorted Boosts Began to Unwind • New Residential Construction Remained in Low-Level, Downtrending Stagnation, with Building Permits Shy by 42.5% (-42.5%), Housing Starts Shy by 47.6% (-47.6%) and Single-Unit Starts Shy by 54.1% (-54.1%) of Recovering Pre-Great Recession Peak Activity • Multiple-Unit Starts Recovered in 2015, but Have Fallen Back Since by 20.9% (-20.9%) from Their Pre-Recession High  More ...
No. 931: December Retail Sales, Consumer and Producer Price Indices, Financial Markets Subscription required January 15th, 2018
• Headline Fourth-Quarter 2017 Real Average Weekly Earnings Contracted; Annual Real Earnings Growth Fell to a Five-Year Low • December Real Retail Sales Softened, but Headline Activity Surged for the Holiday Season, Despite Contracting Real Earnings and Slowing Real Growth in Consumer Credit • Nominal Fourth-Quarter Sales Jump Reflected Higher Inflation and Insurance Payments • CPI-U Monthly Inflation Slowed to 0.15% in December 2017, Annual Growth Slowed to 2.11%, with Core Inflation at 1.78%, Still Below FOMC Target • Final-Demand PPI Monthly Inflation Declined by 0.09% (-0.09%) in December 2017, Annual Gain Pulled Back to 2.61%, from a 70-Month High of 3.07% in November 2017 • Dampened PPI Inflation Reflected a Reversal from Hurricane-Disrupted Energy Prices, with Monthly Goods Inflation at 0.00% and Services Down by 0.17% (-0.17%) • Despite the Booming Headline Numbers, Prospects Continue to Darken for U.S. Economic and Financial-Market Activity • Tax Cuts and High Stock Prices Are Positive for the Economy, but Do Not Mistake Inflation and a Declining Dollar for Increased Wealth or Income  More ...
No. 930-B: December Labor, Private Surveying and M3, November Trade Deficit and Construction Spending Subscription required January 8th, 2018
• Weaker-Than-Consensus 148,000 Payroll Gain Was Boosted by Downside Revisions, Low-Level Annual Payroll Growth Continued to Signal a New Recession • Annual Household Survey Revisions Were Negligible for Headline U.3, but Not as Placid for Broader Unemployment and Other Measures • December 2017 Unemployment Rates Were Mixed Month-to-Month: U.3 Eased to 4.07% from 4.12%, U.6 Rose to 8.08% from 7.99% and the ShadowStats-Alternate Held at 21.7%: No Full Employment • Indicators of Stressed-Employment Conditions Have Re-Intensified, Following Brief, Hurricane-Distorted Improvements in September • Private Surveying of December Labor Conditions Showed Monthly Gains, but with Annual Contraction/No Growth and Ongoing Non-Expansion • Monthly Trade Deficit Topped $50 Billion for First Time in Five Years, with Fourth-Quarter 2017 Real Merchandise Trade Deficit on Solid Track for Worst Showing Since First-Quarter 2007 • Despite a November Gain on Top of Upside Revisions, Real Construction Spending Continued in Annual Decline, as Last Seen During the 2006 Housing Collapse, Still Shy of Recovering Its Pre-Recession Peak by 21.4% (-21.4%) • December 2017 M3 Annual Growth Jumped to Back to a Two-Year of 4.8%, as Monetary-Base Annual Growth Jumped to a Three-Year High of 9.7%  More ...
No. 930-A: December Labor, Private Surveying and M3, November Trade Deficit and Construction Spending Subscription required January 5th, 2018
• Annual Household Survey Revisions Were Negligible for Headline U.3, but Not as Placid for Broader Unemployment and Other Measures • December 2017 Unemployment Rates Were Mixed Month-to-Month: U.3 Eased to 4.07% from 4.12%, U.6 Rose to 8.08% from 7.99%, and the ShadowStats-Alternate Held at 21.7% • Low-Level Annual Payroll Growth Continued to Signal a New Recession • Private Surveying of December Labor Conditions Showed Monthly Gains, but with Annual Contraction/No Growth and Ongoing Non-Expansion • Trade Deficit Widened Month-to-Month and Year-to-Year with the Fourth-Quarter 2017 Real Merchandise Trade Deficit Still on Solid Track for Worst Showing Since First-Quarter 2007 • Despite a November Gain on Top of Upside Revisions, Real Construction Spending Continued in Annual Decline, as Last Seen During the 2006 Housing Collapse, Still Shy of Recovering Its Pre-Recession Peak by 21.4% (-21.4%) • December 2017 M3 Annual Growth Jumped Back to a Two-Year High of 4.8%, as Monetary-Base Annual Growth Jumped to a Three-Year High of 9.3%  More ...
No. 929: A Challenging and Potentially Dangerous Year Ahead Subscription required December 28th, 2017
• 2018: An Unusually Challenging and Unsettled Time, with Likely Tumultuous Markets, a Non-Recovering Economy, Political Turmoil and Election Surprises • Faltering Consumer Outlook and Tightening Liquidity Conditions Are Inconsistent with Shrinking Unemployment and Surging Holiday-Season Sales • Beyond Data Disruptions, Booming Headline Economic Activity Has Been Fueled by One-Time Insurance Payments and Liquidation of Savings, Not by Regular or Sustainable Income Growth • December 2017 Marks the Tenth Anniversary of the Formal Onset of the 2007 Recession • Economic Expansion Is Defined as Growth Beyond the Prior Business-Cycle Peak • Key Headline Measures of Consumer and Industrial Activity Still Remain Shy of Recovering Pre-2007 Recession Peaks • Trade Deficit Has Turned Increasingly Negative for Fourth-Quarter GDP  More ...
No. 928: November Durable Goods Orders, Home Sales and Revised GDP Subscription required December 22nd, 2017
• New-Home Sales Reporting-Illusion Reflected Absurd Volatility: Multi-Decade-High Surge of 17.5% in November 2017 Sales Was a Gimmick; Considering Massive Downside Revisions, Recast Sales Boom Contracted by 1.9% (-1.9%); Headline Detail Still Shy by 47.2% (-47.2%) of Recovering Pre-Recession Peak • Boosted Heavily by Unstable Seasonal Adjustments, November Existing-Home Sales Jumped 5.6% Month-to-Month, Still Holding Shy by 20.0% (-20.0%) of Recovering Its Pre-Recession Peak • As Hurricane-Disruptions Work Out of the New Orders System, Real Annual Durable Goods Growth Slowed Sharply, Ex-Volatile Commercial Aircraft • Real New Orders for Durable Goods Remained Down by 9.7% (-9.7%) from Recovering Its Pre-Recession Peak • Third Estimate of Real Third-Quarter 2017 GDP Revised to 3.16% (Previously 3.30%), versus 3.06% in Second-Quarter 2017 • Second Estimate of Third-Quarter Gross National Product (GNP) Revised to 3.65% (was 3.47%); Gross Domestic Income (GDI) Revised to 2.03% (was 2.53%) • Better-Quality Economic Measures Still Show No Full Recovery from the Collapse into 2009 and No Economic Expansion  More ...
No. 927: November Housing Starts, Freight Index, Outlook for the Markets, Dollar and Gold Subscription required December 19th, 2017
• Stocks Continue to Boom, with Extreme Downside Vulnerability to Near-Term Negative Economic Surprises and Otherwise • Pending Run on the U.S. Dollar Should Mirror a Flight into Gold and Silver • Economic Reporting Does Not Reflect Costs of Destruction from Natural Disasters, but It Does Reflect Gains from Temporary Relief and Recovery Activity • Freight Index Continued in Non-Recovered, Low-Level Stagnation • Nonsense Volatility and Revisions Hit November 2017 Housing Starts, Amidst a Continued Likely Boost from Disaster Recovery • Headline Gain of 3.3% Was 0.5% Net of Revisions • Activity Remained in Low-Level, Non-Recovered Stagnation, with Housing Starts Still Shy of Their Pre-Recession High by 42.9% (-42.9%) and Single-Unit Starts Shy of Recovery by 51.6% (-51.6%) • Multiple-Unit Starts Recovered in 2015, but Have Fallen Back Since by 18.4% (-18.4%) from Their Pre-Recession Peak • Building Permits Remained Shy of Recovery by 42.6% (-42.6%)  More ...
No. 926: November Industrial Production and Retail Sales Subscription required December 15th, 2017
• Despite Mixed Headline Economic Numbers, Uncertainty Is Holding Back Real-World Business Activity • Booming Retail Sales Reflected Complications with Non-Seasonal, Residual Hurricane Distortions Combined with Concurrent Seasonal Adjustments • November 2017 Retail Sales Jumped by 0.79%, up by 0.40% Net of Inflation, On Top of Sharp Upside Revisions to September and October Activity • Running Contrary to the Strong Retail Sales Report, November 2017 Consumer Goods Production Dropped by 0.39% (-0.39%) and Revised Sharply Lower in October, September, August, July and June • November 2017 Total Industrial Production Rose 0.2% from an Unrevised, Hurricane-Distorted/Boosted October Production Level, in the Context of Sharp Downside Revisions to September and Earlier Activity • Net of an Oil Production Boost from Hurricane Nate Recovery, November Industrial Production was "Unchanged" Month-to-Month, per the Fed • Dominant Manufacturing Sector of Industrial Production Remained Shy of Recovering Its Pre-Recession Peak by 4.7% (-4.7%) • November Manufacturing Showed 119 Months of Continuous Non-Expansion, the Longest Such Period in the 100-Year History of the Industrial Production Series; Second Worst: 96-Months of Post-World War II Retooling from War to Consumer Production; Third Worst: 88-Months of the First Down-Leg in the Great Depression  More ...
No. 925: November CPI and PPI Inflation, FOMC Subscription required December 13th, 2017
• Unable to Escape 2008, FOMC Boosted Rates a Quarter-Point, Nonetheless, Amidst Fed Projections of Lower Unemployment and a Stronger GDP • Yet, Fundamentals Still Point to a Weaker Economy as Fed Chair Janet Yellen Described the Economic Outlook as "Highly Uncertain" • Prospects for U.S. Economic and Financial-Market Activity Continued to Darken; Faltering Real Consumer Credit and Earnings Do Not Support the Purported Boom • Amidst Downside Prior-Period Revisions, Fourth-Quarter 2017 Real Average Weekly Earnings Were on Track for Second Consecutive Quarterly Contraction • Monthly and Annual Jumps in CPI and PPI Were Due to Gasoline Price Swings; Headline Inflation Gains Were Not Due to Strong or Over-Heating Economic Activity • November 2017 CPI-U Monthly Inflation Jumped by 0.39% (Was 0.11%) Pulling Annual CPI-U Inflation Higher to 2.20% (Was 2.04%), with CPI-W at 2.32% (Was 2.06%) and ShadowStats at 9.9% (Was 9.8%) • November 2017 Final-Demand PPI Inflation Monthly Gain of 0.44% Pulled Annual Gain to a 70-Month High of 3.07%, versus 2.79% in October 2017 • Continuing Monthly Jump of 0.44% in November PPI was Dominated by Gain of 0.98% in Goods Inflation (4.63% Energy Gain), Versus Gain of 0.17% in Services • Inflation Will Soften November Real Retail Sales Growth versus Nominal Growth by 0.4% (-0.4%) Month-to-Month, 2.2% (-2.2%) Year-to-Year  More ...
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John Williams'
"Shadow Government Statistics"

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John Williams
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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

 


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