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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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Rational.
amazing. time for bed
No, he wasn't. MooCow was just pretending that you said something that rose to the dignity of error.
Garbage men could tell you all you need to know about the economy. Less aluminum cans in the recycle bin? People are taking them to the recycle centers for coin instead of giving them to the county at the curb. Hell, there must be at least 3 guys in pickup trucks driving the streets the nights trash goes out looking for scrap metal. Red neck front running, things are peachy in Obamerica.
Trust the government's numbers?....Ahhh No. As for "saviors" there aren't any and they certainly won't come in the form of an "economist"..
This article is nothing but propaganda through the the back door.
Biderman v. Brusca in the WWF. It's a pretend JEW-FIGHT!
Nothing of the sort.
- Why don't you reply to bkrolik post?
this post has to be an April Fool's joke...look at that picture...this dork with his hand on its chin?!?!?!
Better than your pic..
what... a a chin with his hand on his....
I gave you an up arrow so no one would notice you are the only one giving yourself green arrows. (Wink, wink)
And I have to give you a down arrow for having sided, even jokingly, with Bruscetta here.
Akak, I gave you a down arrow just so you wouldn't have a zero category. Hey, don't mention it.
Fair enough.
Bruschetta is just ticked because he's not as good looking as Taraxias, as popular as hamy wanger or as socially adept as Trav777.
And not nearly as sexy as Charles Biderman. Some guys got it, some guys don't.
If this Robert Brusca fucknut is suppossed to be the Tylers' idea of "balanced" viewpoints on here......it is failing badly.
I'm not balancing anything.
I'm showing you that you that you worship false idols.
Read my piece. How do you defend him. Watch his video.
He is not just disagreeing with the government data he is insulting them with his own stupidity!
You endorse that?
It's your problem.
By the way nice language.
There is something particularly perverse about a Federal Reserve flack accusing anyone of idol worship.
I can't think of another institution in U.S. history that is a more hideous Moloch of Doom than the Fed. Moloch-worshippers threw their infant children into the flames inside the monstrosity; America has thrown its children into the inflationary fires of the Rothschild/Warburg/Goldman/Rockefeller Debasement Machine.
You are without excuse, Bruschetta. You serve the Satan of fiat, a network of criminal debt merchants who precipitate wars, impoverish nations and erase the value of our life savings at a computer keystroke. You have blood on your hands.
Come on Robert!! You know perfectly well that the long term program of every globalist CEO is to bring U.S. wage rates down to Chinese levels. That being the case we would expect jobs to be created, but we would also expect more lower paying jobs. All Biderman is saying that employment tax receipts - this is the early part of the year, after all - are diverging from the BLS employment numbers indicating less dollar income flow from the "rising employment". As investors we are interested in dollars of employment income, not numbers of jobs. If wage rates are steady or rising then tax collections yoy should rise along with job creation. If tax collections are flat and jobs increasing then income flows are probably flat and the job growth means nothing good for the economy - unless of course you are a globalist wishing for falling living standards in the US. Biderman is right! You need both employment tax collections and employment counts to rise in order to have a healthy recovery. If the tax collections flat line then you have a sick economy with significant consequences for middle class consumption.
I sense that Mr bruska like any bureaucrat sees the work through the lense of how he is accustomed to looking at it and what is convenient for him. He points out the flaws in Bidermans points not to show that it makes his reasoning invalid but to simply create doubt yet he summarily forgives the bls for its use of antiquated and inaccurate methods. For a bureacrat the system they are accustomed to using is tje standard against which all others are measured - yet to those outside the buracracy they are an anachronistic joke the know weaknesses of which serve the purposes of the puppet masters.
"economists have lots of rules"
Yes.. as they fabricate reality around them. Can't keep their fingers out of the data, can't descern correlation and causation, and pretend to be scientific without any meaningful capacity to test and prove their theories.
Data points are profoundly useless 99% of the time, and only good for talking crap over a beer. Academics forget this, successful investors do not.
NO
just a system to organize data. Definitions. Consistency. Not just making it up under an assumed name...
You know?
Oh, maybe you don't...
Be very fucking careful with that "assumed name" crap.
Your host is of an assumed name.
If that was all economists did (organise data) then perhaps it wouldn't be such a joke of a 'profession'.
However, as we all know, theres nothing a "data organiser" likes to do more then knock on the doors of the powerful, and sell advice... advice grounded in psuedo scientific method, presented with a certainty that is unattached to reality.
You guys aren't physicists, mathematicians, statisticians... you're psuedo scientists, and peddling influence like seers of olde..
Assumed name aside, your name is as meaningful to me, as mine is to you.. whats the difference? Infering (again as is your profession) that something has significance, when it is you that attach significance based on your personal perspective?
Bravo..
@RobertBrusca
Consistency? How many times has your vaunted "organization" recalibrated it's models and changed it's "definitions"? Why is U-6 the old U-3?
stick it G man
Economist: A lobbyist with a degree in Trickanology that makes squiggly lines run in the direction their paymaster tells them.
So you endorse the error-filled Biderman approach?
Oh, you are Booboo.
Never mind
As a minimum, Biderman is very entertaining
Yes, he's very entertaining, but I've looked through a number of previous posts and he seems to have his eyes set on the BLS data, and for good reason. I suspect he knows they're majorly 'cooking the books' and as an institutional investor advisor, his opinion means much more than most people.
BRILLIANT! Hey have you heard Uncle Ted lately? TED NUGENT rants...
http://mediamatters.org/blog/201204170018
Mr. Brusca,
I'll just focus on employment. You prefer the BLS data over tax receipts? What defense do you have for the birth/death adjustment? What defense do you have for the 1M+ annual adjustments over the last couple of years? If politics were not involved in the BLS data, why has the headline NFP number been revised to U-3 instead of the a former metric that was closer to the currently observed U-6? Why does the BLS ever change the way it measures any datum? Surely not politics, right?
Birth-death adjustment has a purpose. There is also the household data.
How is doing all the wrong stuff superior?
"How is doing all the wrong stuff superior?"
I ask myself that about Obama all the time.
@RobertBrusca
Now I'm supposed to focus on the household survey? Regardless, what purpose does the Birth-death adjustment have other than to introduce a bias? How long have we had the BDA? When/why did we get the BDA?
.............crickets..................
Are those birth-death modeled crickets, hedonically adjusted crickets, thrice-(downwardly)-revised crickets, survey-based crickets, or seasonally adjusted crickets? Are the growing number of non-chirping crickets automatically removed from the officially stated chirp force? Or are you referring only to core crickets, conveniently ignoring all others?
I mean, come on man! We are mighty PhD cricketologists! We must massage all these cricket-related numbers if we are to put the gardener in the best possible light! (Whose ever-growing green grass, incidentally and of course just coincidentally, provides our very sustenance.)
Watson, Brusca must be a SHILL.
Brilliant, Master Holmes..........
No shill. just wary of all the bluster against government numbers and the tendency by some of you to embrace clearly flawed data.
Shill against swill
if you will
You sound like a pompous government employee. You quickly point out the "We Economists", but you fail to remember that you fools got us into this mess. Bailouts do not qualify as prosperity, but better stated as theft from the public through the increased cost of goods. Printing $$ does not make you "Economist" smarter, but rather makes you look like a bunch of monkeys hitting the print button.
So take your page or so of government propaganda and stick it in the place the sun does not shine....
This is far to complicated an issue to even begin to answer. But taring every economist with this epithet over what the Fed did clearly is overreach.
Some agree with the policy/ some don;t. That simple.
dialectic bullshit!
I think that Dona k is right. you spend time replying and antagonizing ZHedgers, you must be a masochist indeed.
@NOPOMO
Pompous? Where would you ever get an idea like that?
No one's going to accuse RB of extending a proverbial olive branch or lacking any prejudice against the posters here.
When do we see some of the thieves go to jail?
Olive branch? to whom?
Robert, right or wrong--it still astounds me that trillions of dollars of value shift, sometimes dramatically, based on numbers that are subsequently revised many times and dramatically so as well. It all comes down to the act of observation and quantum uncertainty, the tools of observation do tend to create a reality, even if briefly. It is our tools of analysis that have become anachronistic and in need of revision, historical trends in today's world not only are suspect in the data supporting them, but are increasing short lived as predictors of sustainability of a trend, even when based on accurate data, tools of analysis and interpretive skills of economists and markets. all this being said, and despite my fondness for this site--an economist of stature, right or wrong, should have better things to do than respond to either brain dead or brilliant commentary or anything in between. The world awaits clarity it is not to be found in the words of folks like me, or you for that matter, spouting off into the ether.
Monkeys do it better! Right on buddy, don't know who came in and dissed the whole line...
Shameless, sort of exhibitionist....
you must work for the Fed....
Not for a long time.