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Slaying the sacred cow: Biderman
I can see what reverence people on this site have for data. Government data are not good. If it is seasonally adjusted it has been contaminated. Government surveys are crap. And private data are better.
Well are they really?
And if you reject so much government data how you know anything about anything? Or do we just make it up from our own neighborhood experience like we are Mr. Rogers or something?
Today Tyler put up a video of the revered Mr. Biderman of Trim Tabs fame. Mr. B was making an absolute fool of himself while trying to be critical of government reports. The video is embarrassing to watch.
It’s his right to do that of course. Just as it’s your right ( I guess) to reply snarkily to what I write using profanity. But as sacred cows go this guy is probably better off on the grill than being worshipped. I’d like mine well done, please.
Where to start?
Advance release: Retail sales every month comes out as an advance release… I know how stupid that is; they should release the final report first then the prelim then the advance! But they don’t you actually have to wait for the final report for two more months. Then they are revising data in each of the next two months. Of course we analyze the report for what it is when it’s released. Economists are well aware that for retail sales sometimes the revisions bring a bigger change than the original release. It’s why the retail sales report is not just about the headline. And no Mr. B did not discover this; no he did not discover America either.
Maybe we economists and those in the press do not stress that this is the advance report enough? But the report write up usually features comments about how previous data were revised. I’d assume the ‘we have a brain in our head crowd’ would realize that next month this number, too, could be revised. It’s not final. Admittedly that’s s a subtlety.
Auto sales; Biderman does his worst when he takes a pot shot at auto sales. The BLS reported that the advance report’s value of retail auto sales rose. But Biderman insists that - and everyone knows that - this last month unit sales fell in March from Feb. Well, yes but…
Production is not consumption: I just went through this subtlety with something I wrote on industrial production. Apparently some people do not make a distinction between production and consumption or producer good and consumer goods. . We economists do. Biderman is so confused in this rant I hope he is embarrassed to have gone on so smugly on and on about something he was just dead wrong about. The auto figures reported as unit sales by the industry are about all units produced and imported, they are not about consumption at the retail level.
Dollars are not units- The retail sales report is a dollar-value report not a volume report. So that is the first disconnect for Biderman. When you look at car production in the US you get unit sales the percentage change is volume percentage. Retail sales is a dollar-value report.
Investment goods are not consumer goods - You might be aware that businesses use vehicles. In the GDP accounts we keep separate data for investment and for consumption. So all the vehicles that are produced each month plus imported do not go into retail sales…big mistake here Mr B. When businesses buy cars or trucks the amount of domestic production allocated to consumption will differ from the headline on unit sales. One big factor here is the auto rental companies who periodically need to upgrade their fleet. When they buy to renew their product it makes a big subtraction relative to the headline reported that month.
Used cars sales are in retails sales- Retail sales have yet another fly in the ointment. Retail sales are about all sales, not just the sale of new production. Used car sales are in the BLS mix but are not in Biderman’s. Yet another reason why monthly retail car sales expressed in dollars are different from the monthly production and import numbers.
And you guys LIKE his data? And he is going to save us?
He is so confused I don’t know what you can learn by listening to him. You cannot even compare the monthly unit sales numbers to car sales in retailing. It makes no sense. Yet, go to the tape, there he is spouting off and smug.
BLS data collection is archaic but….Now this is always a problem because economists have lots of rules. Data are carefully collected to ensure things get counted up correctly. And if they are not careful then they can undercount or double count so data in the economics system are put though very specific processes. I’m sure that there are ways to make things more up to date. The BLS system is old and it an old technology system. But there are issues in collecting data if you want to report out data that really make sense.
USING FICA tax receipts as a jobs proxy – Next, the idea of using the FICA taxes data as a proxy for job growth may seem like a good idea – a no brainer. Economists do look at it as a gauge but it is a very flawed gauge. There are some major assumptions in doing that which is to say several ways in which there is actual slippage so that the gauge may actually be wrong. .
Wage/salary differences are an issue- The employment tax is a flat rate tax but it’s assessed on the income you make that week until you reach the max. So there is a big zone in between a zero pay check and the max. There is no way of knowing when workers are added if they are higher or lower paid than the average for workers as a whole last week or last month.
Hours or length of the work week - Another little wrinkle is that hours-worked change. As that happens comparisons wills change week to week or month to month even if the number of workers does not change.
Overtime- If you get paid more for working overtime that could be another factor causing this tax data to shift without any link to new employment.
So you have several disconnects that make this approach only a very raw proxy for what Mr B uses it. He acts like its gospel and it is only a ballpark sort of guess-timate. Yet he wants you to think it is superior to government data? Actually it is government data and it is being tortured when put to that use.
Interesting.
So thumb your nose at me, at economists, whatever. But at least after posting this I can say I told ya so or that I explained it to you.
You can ignore this or read it and learn something the choice is yours. But in my opinion the government data are not cooked. They have not been bent for any election cycle, though that allegation is often made. And private-sector data are rarely are offered up with the kind of attention that would allow them to compete in any way with the government’s reports. The only exception to this is the ADP which is often different from the government report it tries to track and is derided mercilessly despite the great effort put into that report.
I just think some people want data that go the other way because they want to be contrary. So be contrary and don’t change your opinion. But I will continue to try and point out how things are shifting and some of you will appreciate it and a few of you will continue to make fools of yourselves.
Your choice.
Bidermans’ data are flawed. He has no insight on job growth or on retail sales. He does not even understand the concepts.
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I can best equate "Economists" with Pink Slime. Biderman does not contain additives.
I see Brusca gives himself green arrows....
What a loser.
robert - i may have given you the only 5 in the ratings but you make valid points.....as much as i adore zh, i agree that some of the commentary betrays a lack of understanding of statistics and data processing....
on the other hand, one problem you overlook is methodolgical consistency which is why i benchmark against john williams who is indeed an economist. it is in these definitional changes over time in the government data series where i inveigh against government deceit.
it is hard to know when the data has been retrofitted and when not. so i assume in most cases that apples and oranges are being compared....
and you make an excellent point about fica. broader tax withholdings may be more valid as a gauge of employment.
having said all of that, the state of the economy is not good and has not recovered to 2008 in many broad areas. the advances it has made have been under the aegis of over 24 trillion usd in backstops, guarantees, handouts, profligacy, corruption, and financial terrorism. as reported on zh recently, liquidity is not capital and it is the latter which is evaporating before our very eyes.....
Of course you are right. But 'recovering' is not 'recovered.'
There is a constituency to see no good good news of any sort. I find that curious.
Mr. Brusca:
Can you tell me what real job(s) you've had? Like a real, non-academic private sector job? Economist at a corporation, working for a hedge fund, etc.? I'm just curious if you've worked for a job where you 1) didn't get paid with stolen money (government job) 2) were paid based upon performance (not teaching some pimple faced kids theories with no real world applications). Thank you.
The Desperation that is this article makes me squirm with embarrassment for the author.
"Goverment data are not good"
Wow.....you are got that english down pat banker boy.
Bansters, it is you that needs an English lesson. The word "data" is plural for the singular "datum".
Even so, a point was made of using 'are' twice. Revealing in itself.
And what is the plural of opera?
And what is the plural of opera?
English plural is Operas
Latin plural is Opere
Wrong!!!
Opera is plural. the singular is opus
Finally someone singing to the choir!
Isn't data used in both singular and plural forms?
Only when it is used incorrectly!
While I was persuing my PhD, my acedemic adviser made the profound statement that obtaining a PhD neither required intelligence or an understanding of the subject matter, it merely requires persistance.
Anyone that can afford a PhD can get one. A PhD does not prove intelligence, it onlys proves that a person met the program requirements.
Here is what I posted on a different thread:
"Sciences are capable of producing repeatable and provable results within a very small margin of error. Economics is a contrivance born from sociology and philosophy. Sociology uses scientific methods and statistics to draw broad conclusions about observed events, behaviors and trends. Philosophy is not a science, it is mental masterbatiory speculations about things that cannot be proven with complete certainty.
Therefore, economics is a mental masterbation that uses math to model sociological events, behaviors and trends in an attempt to manipulate people and public policy towards profit maximization and to explain failed attempts to manipulate people and public policy towards profit maximization.
Economic writings date back to Mesopotamia, Aritotle wrote on economic subjects. Early economics was simple forcasting (such as plant in spring, harvest in fall, drought is bad, keep stores for bad times, winters are cold) and understanding value, interest and monetary alternatives to barter. Economics was not distinguihed from Philosophy as a seperate discipline until Adam Smith's The Wealth Of Nations treatise in 1776.
It is irrefutable tha many of Keynes most basic assumptions were antiquated (such as the assumptions regarding the 40% agrain society), flawed (assumptions about the nature of "utility") or just totally wrong (infinite growth, infinite resources).
Keynesian Economics will eventually be discredited just as blood-letting to balance the humors was abandoned for real science. Austrian Economics is better than Keynesian economics in the assumptions, but still ALL economics is based on assumptions and historical trends.
I have more faith in astrologers than economists."
This post screams of ego defense.
" Retail sales is a dollar-value report." So fewer goods being sold at higher prices is growth?
Economics is best compared to the 'science' of Phrenology.
Month to month prices can fall. value can fall and volume can rise. In japan it has happened a lot.
That is not what drove the difference in retail sales... if you are interested actually read the various ways that Biderman's aggregate is wrong. Do that instead of cherry-picking one point you think you can use to make me sound stupid for something I didn't even say.
What a jerk.
No wonder you like Biderman
.
Indeed, there was utterly no need for the previous poster to make you sound stupid, when you had already done an exemplary job of that yourself:
Now go eat a banana.
"Austrian Economics is better than Keynesian Economics in the basic assumptions." - Mr Mirbach.
I generally agree but there is a fundamental flaw that relegates Austrian economics to the historical backwaters. I have tried to i.d. It in this series of posts:
http://pearlsforswine.wordpress.com/2012/04/17/why-austrian-economics-ma...
http://pearlsforswine.wordpress.com/2012/04/17/additional-perils-of-the-...
http://pearlsforswine.wordpress.com/2012/04/17/is-the-business-cycle-rea...
Partially correct. A fuller definition is:
Philosophy is the Love of Truth
Nevertheless you've tangentially glimpsed into the very essence of the critter called "Economics".
http://www.youtube.com/watch?feature=player_detailpage&v=Iz-8CSa9xj8
>The auto figures reported as unit sales by the industry are about all units produced and imported, they are not about consumption at the retail level.<
This is the typical crap that gov hacks and PHD misfits like "Bob" think is normal and makes sense- it's units produced- NOT sales- but they don't call it that, do they? They call it "SALES". But it's not really sales- not like a an average person of normal intellect and common sense would think of sales- autos sold to the consumer. It's one thing, but they call it another.
Just like unemployment- it's not 8.2%- the number they headline all the time- it's really twice that, isn't it? Typical BS numbers from worthless leeches who think they are intelligent.
For your info, Bob, you're an educated idiot. Go get your PHD and wipe your ass with it.
Brusca's a washout from the New York Fed, if his own bio is to be believed.
He loses major points out of the gate for 1) having been enculturated in that environment (assuming he's telling the truth about working there, in some capacity, regardless as to how trivial), and 2) writing analyses that are confusing in composition and hack-worthy reckless in the data they purport to cite (even if they contain little to no citations).
I would rip this latest failure by Brusca to state a compelling or even clear case if I weren't so tired and hadn't resigned myself to the position that Brusca doesn't even warrant my time & energy that would be required in doing so.
Take anything Brusca writes with a massive grain of salt, and then urinate on it.
p.s. - Not that it's relevant, but if you look at Brusca's picture, it's clear he had a past career as Father Guido Sarducci.
http://snl.jt.org/caps/characters/DoNo-Father%20Guido%20Sarducci.jpg
Maybe he graduated from this university:
http://www.youtube.com/watch?v=kO8x8eoU3L4
Brusca was Geithner's professional ball washer when Geithner headed the NYFRB. Scrub, scrub...rinse, rinse.
We all know there is no such thing as statistical manipulation, particularly when any government is involved. Take Europe as just one fine example...
"There are three kinds of lies: lies, damned lies and statistics."
- Mark Twain
Manipulation is redundant.
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Data discovery
Mr. Brusca, I see you've been a fair sport, and have stabbed at several data collection methods as "best", or told us that it's "complicated", et al. I'm an armchair economist, as in to say it's a hobby, acquired a few years ago, and we're, well we're "not so smart" like "really real" economists like yourself, so when you read this in the AM, catch us all up on "hedonics". What are they, and how do they make your job easier? Layman's terms now, leave nothing out.
It's my most favorite form of statistical alchemy related to economics.
If one is forced to choose between cooperating with a mobster or cooperating with a government employee, one has to choose the mobster.
The mobster has honor, the gov employee has lost all honor.
Better wording from Nassim Taleb:
If you ever have to chose between a mobster and a civil servant, go with the mobster. Any time. Institutions do not have a sense of honor, individuals do. Never trust the words of a man who is not free.
So this is your revenge MDB_?
+55
Just what I was thinking, another software variation on MDB and Hamy Wanger. Amusing stuff.
Lots of Conomic Data Releases, All Of Them Misleading
By Lee Adler
Conomic data meets Wall Street anal cysts' consensual sexpectations.
Today they did because that paper has been put to bed and the dealers are looking forward to a $50 billion cash windfall on Thursday thanks to Treasury bill paydowns (which are known in advance). While Rupert Hacker Murdoch’s and Hizzoner Mike Bloomberg’s mercenaries are scratching their heads looking for reasons why the market is up so much today, there’s your reason. Dealer trading accounts will be flush with cash come Thursday, and they got their short squeezes started early in anticipation of that cash settling. The New Yawk Timids was so confused about why the market was up, they actually made a word stew, tweeting “Markets soar on corporate profits, Spanish debt sale, Apple stock recovery, and no strikingly bad news.”
But, I digress.
The headline number for retail sales yesterday was an increase of 0.8% month to month, seasonally adjusted, versus a conomic consensual sextimate of 0.3%. The market had a little premature ejaculation in the morning, then the dealers went back to their business of paying for the new Treasuries hitting their accounts yesterday.
We’re interested in actual volume of sales, not the inflation skewed dollar total. To get to the kernel of that, I like to look at the real, not seasonally adjusted retail sales, adjusted by top line CPI inflation (not core which grossly understates the actual). Then I back out gasoline sales, which are a substantial portion of total retail sales. Gasoline sales distort total retail sales higher when gas prices are rising, when they actually act like a tax on disposable income and reduce non-gasoline sales. To get the real picture of the strength of the consumer sector, we must back that out. Therefore the number that I track is real, inflation adjusted sales, ex gasoline.
March is always an up month for that series. This year the gain was 10.5% in March. Sounds good, but it’s not. In fact it’s much worse than the headline number report suggested.
The rest of the story.
"...NOT the inflation-skewed dollar total", a very valid approach. Gasoline units have been in decline for 10 years, I read here. How much of the reported GDP numbers have the inflation factor as a boost? Or corporate profits even? I know, subsribe to your newsletter. OK I just might have to, good stuff Lee. Thank you.
I'll stick with Mr. B thank you.
Robert Brusca, you have slain nothing. You are a conjurer by definition, since you are an economist. Probably part of the Keyensian Clown-Posse to boot.
What a douche. Pass the jar.
If you are collecting employment information on 200+ million people there are obviously going to be errors in any method.
"Economists do look at it as a gauge but it is a very flawed gauge "
You offer some reasons why it is would not be accurate (again no method is) You offer no evidence that it is "very flawed" The only way to show it was very flawed would be to compare it to your very flawed numbers.
This is one of the main reasons people do not trust you and never will. Economists are essentialy alchemists. They take disperate numbers mangle them together and claim they are showing you reality. Both you and biderman's stuff is mostly useless. With Biderman at least his useless reflects the reality most people see around them.
hey, Brusca, how about unemployment rate and workforce participation bull shit government data?
more dialectical bullshit from the master
Creative re-spawn you got going there Trav.
Didn't think you could be more of a repressed savant...
Robert,
I see you are PhD. My understanding is, you have been tought how to write a good critique. Lets try to bring this discussion to high standards.....
The main thesis of Biderman's video is that advanced sales data collection is antiquated and seriously inferior comparing to some modern means - getting data from credit and debit card aggregators, both in terms of timing and data scope. Do you disagree with this thesis? If yes, then why? What data collection method would you consider the best?
Do you believe there is no relationship between NA (US) car production and US car sales expressed in dollars? Did you analyze historical data? Did you run any regressions on them? Can you refer the readers to academic literature analyzing this? I, personally, know very little about the this specific issue, and would be happy to look through some research...
I would greatly appreciate your response. Having noticed some of your rather emotional responses to other readers comments, I hope we would be able to keep negative emotions out of our discussion.
It is preposterous on the face of it to force the taxcows to pay legions of "economists" to collect and massage data points that are widely disagreed uopn as having value.
All of this should be done privately with restrictions on invasion of privacy laws thoroughly applied. The use of this information is really of pecuniary interest to the WS maggots that gun HFT algos. This information is of no practical use for more than a very few people and institutions so should not be paid for by the average taxcow that more likely than not have the information used against himself by the recipients of ZIRP.
all one needs to know to call Brusca's BS is: "He has been a Division Chief at the NY Fed"
That is why he won't address the point below. The dude is paid to defend the propaganda, not think creatively.
RobertBrusca has many points to make, and we have to internalize some of these points and evaluate whether it makes sense or not. Making fun of this poster doesn't change that.
The poster is critical of Mr. Biderman's usage of different economic data. We may contest whether this poster's critique is true vs off the mark, however making fun of this poster does not make his assertions wrong.
Just as ZeroHedge forced me to re-evaluate some of the stuff going on in the world, I believe that some of you need to re-evaluate some of the preconceptions you have in your mind. I am not saying he's right, I am asking you guys to make constructive criticism. If you are right, why not enlighten some of us?
Edits for horrible english at 11PM
your avatar is a stooge
If Mr. Brusca had argued the points one by one and respectfully disagreed, the reaction of the readers at ZH may have been different. His post is accusatory and bitterly critical. That puts him in a different category.
Q: Why did he write it?
It seems quite petty, so why go to the trouble for that, and then post it up at zh?
To what end?
When all is said and done it was a bottom*-feeder type of post.
* = this could refer to THE bottom, or else, A bottom .