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Don't Look For Economic Truths In the "Official" Numbers

Phoenix Capital Research's picture




 

The US today is facing a serious issue of staglation.

 

Stagflation is an economic term for a weak economy with higher than usual inflation. This is what crippled the 1970s. And it looks like we might be in for another similar period.

 

Let’s first consider the economic weakness, the “stag” in the stagflation term.

 

The US economy is weaker than most know, largely because the official economic data is massaged to make things look better than they really are.

 

How do you massage economic data?

 

Let’s take jobs for instance.

 

According to the “official numbers” the US economy added 113,000 jobs in January and another 175,000 in February. So, one could argue the US has added nearly 300,000 new jobs to its economy in the first two months of 2014.

 

The problem with this is that other metrics negate this alleged growth. The Wall Street Journal notes that the average hours worked in the US economy FELL by 3/10ths of an hour in the last six months.

 

When you account for this, you will find that in actual terms, the US has effectively LOST the equivalent of 100,000 jobs since September 2013.

 

Put another way, the US seems to be adding jobs to its economy, but given that on average workers are working less, the economic output in the US has been that of LOSING 100,000 jobs in the last six months.

 

One can find other similar issues with the US’s GDP numbers, alleged manufacturing renaissance and other key economic metrics.  And all of these issues point to our economy being WEAKER than the headline numbers claim.

 

Indeed, perhaps the most glaring issues in our GDP numbers relates the CPI or Consumer Price Index, which measures the official inflation numbers in the US (the “flation” portion of stagflation).

 

The official CPI measure for the US claims that inflation has risen 1.6% in the last 12 months.

 

This is rather extraordinary given that food, energy, housing, and just about every other item consumers need has risen in price significantly more than this Indeed, if you remove the accounting hocus pocus from the “official” inflation measures, you’d find that inflation today is over 5%.

 

So we have an economy that is weaker than the headline numbers claim with inflation that is higher than the headline numbers claim.

 

That is STAGFLATION. And given that the Fed is behind the curve on it, it’s only going to get worse before it gets better.

 

For a FREE Special Report on how to protect your portfolio from inflation, swing by

www.gainspainscapital.com

 

Best Regards

Phoenix Capital Research

 

 

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Tue, 03/18/2014 - 13:10 | 4563993 Billy Sol Estes
Billy Sol Estes's picture

http://i.imgur.com/bYCCccE.jpg

Rockefeller says BTFATH

Tue, 03/18/2014 - 13:29 | 4564118 USA USA
USA USA's picture

Misspelling in first sentance:

The US today is facing a serious issue of staglation.

Done reading this garbage.....

Tue, 03/18/2014 - 12:41 | 4563763 nofluer
nofluer's picture

"That is STAGFLATION."

They say consistency is a virtue, and if that's true then Phoenix Capital is very virtuous. They are once again "behind the curve."

Phoenix Capital? Here's some reading for you.

http://michaelepicray.com/2011/05/27/a-vocabulary-lesson-for-the-fed/

http://michaelepicray.com/2011/06/08/we-dont-know-yet-what-happened/

http://michaelepicray.com/2011/10/13/coming-soon-to-an-economy-near-you/

Note the dates on those posts... the first is almost three years ago...

 

Tue, 03/18/2014 - 12:39 | 4563750 evernewecon
evernewecon's picture

 

 

It was everyone's mailing in the keys

and hey there's another failed S & L 

on that street corner during the 

Resolution Trust Cp days of '80.

 

Today's it's free reserves and 

manipulated supply.

 

That's carrying dead weight.

That's a hanging Ponzi scheme.

 

 

 

Tue, 03/18/2014 - 11:32 | 4563271 The wheels on t...
The wheels on the bus are going to fall off's picture

i think the job losses came when they decided to taper QE, i mean the amount of paper printing boys needed to cover 185 billion a month must have been immense.

The economy is spluttering like an malaysian airline flight.....too soon?

Tue, 03/18/2014 - 11:19 | 4563191 Armed Resistance
Armed Resistance's picture

This all sounds like a great reason to provide amnesty to another 30 million people, right?

Or maybe it's the big government party's way of adding new consumers to a dying Ponzi model. The numbers are massaged to propaganda-award-winning levels and then repeated by state-controlled media as fact.

Until we bring about the end of Private Western Central Banking known as the Federal Reserve, nothing will change. The vestiges of free-people still seeking financial liberty are gasping for air as the rest of the world eats themselves to death on a diminishing food source.

May God help us.

Tue, 03/18/2014 - 10:30 | 4562924 LawsofPhysics
LawsofPhysics's picture

This is not the "stagflation" of the 70's.  Rates cannot be raised like they were in the 70's.  This is humanity reaching the limits of the calories that are currently available for consumption.

Big fucking difference.

hedge accordingly.

Tue, 03/18/2014 - 09:54 | 4562776 Ban KKiller
Ban KKiller's picture

Numbers don't lie. Corrupt accountants do. 

The lie that really gets me, in the wallet, is inflation. 

Silver brooches.

Tue, 03/18/2014 - 10:21 | 4562889 robertsgt40
robertsgt40's picture

I wish Z would've expanded on the jobs reports.  How can a 100,000 jobs a MONTH gain  balance againt 300,000+ a WEEK in losses?

Tue, 03/18/2014 - 09:11 | 4562593 DeadFinks
DeadFinks's picture

The re-Carter years.

Tue, 03/18/2014 - 08:17 | 4562407 drendebe10
drendebe10's picture

Round of applause for the arrogant narcissistic lying illegal alien kenyan muslim sociopathic ignoramus for a job well down...  hoo ra!

Tue, 03/18/2014 - 00:18 | 4561910 rusty_nail
rusty_nail's picture

Why are so many analysts looking at lower income levels of newly created jobs?

70% of Jobs created in 2013 were part time. Part timers are NOT looking to buy durable goods nor houses.

Even if the income from part time jobs show up as reduced average income, this is still is an incorrect statistic. You do not take the average of apples and oranges. You do not take the average of full time and part time income. These two groups are NEVER going to buy the same items. They are not going to generate the same GDP. If these incomes are not separated, how can the data be useful? $1 of part time income has a totally different economic impact than $1 of full time income. How could a model handle this mixture of data? To get to the truth of our current situation, we need to get the analysis right.

Tue, 03/18/2014 - 07:53 | 4562277 Comte d'herblay
Comte d'herblay's picture

As long as the $1 is not hoarded, how can they not have economic impact, at approximately the same level?

A $40,000,000 pr year salaried, bonus baby like Lord Blankfein or Joe Cassano, (leaving GDP considerations out of it, since it's likely that both of them have a negative impact on it, i.e. they Produce nothing but get paid for it) and a $20,000 per yr full time hourly worker, or a $20,000 part time each spend their money. The lower income earners spending all of it on taxes, food, twinkies, and cell phones.  Joe spending it on private aircraft ferrying around the world.  Cassano was a political contributor to the campaigns of Democratic Senators Chris Dodd and Barack Obama and the Republican Representative Nancy L. Johnson [13]

In March 2009 Cassano was linked to e-mails he authored in 2006 which solicited contributions from AIG executives for Dodd's campaign due to Dodd's position as incoming chairman of the Senate Banking Committee.[14]

The average of the three incomes is meaningless in analysis, as is the Mean. Irrelevant to any kind of conclusion, and ridiculous on its face. 

The impacts on durable goods purchases are murky to say the least. The aggregation of that spending though allows the plumber who fixes Joe's toilet, and everyone else at all levels paying the same rate to the plumber to buy a new Dodge Ram truck. Those tens of millions of part time workers send their money to the Federal Government---leaving out earned income tax credits----and Joe sends in about $5,000,000 (if that) which the governors redistribute across the broad economy. 

The analysts have to look at all income to gauge the impact at the Macroeconomic level which has the greatest economic influences. 

The government numbers though are plagued by politics.  Therefore false. And once that happens, the only way those numbers matter is how those who are invested 'play' it.  IF one knows that the publication of a government number like say, a hundred million man increase in employment due to private construction in infrastrucure spending, budgeted for 10 yrs, is going to be announced and that investor knows the date the number will be announced, he will have already laid his bets to profit from the inside information that will definitely impact the stocks of infrastructure materiele, manpower, and other mandatory resources.   But if the investor already knows that the publication of the Unemployment rate from quarter to quarter, will have no impact at all, he need not do anything in reaction to it. 

It's not the meat, it's the sauce. Not the steak, but the sizzle. 

 

Mon, 03/17/2014 - 20:42 | 4561342 James
James's picture

Re: Your stupid animated GIF

1.You lost it when downloaded to your file. Turned into a PIC. Possibly thru written code to stop its use.

2.It was successfully downloaded but you used it elsewhere that worked but in your file will be a PIC from now on.

Both have happened to me.

Try loading GIF from source then directly to ZH.

Tue, 03/18/2014 - 07:55 | 4562158 messymerry
messymerry's picture

Thanks for the suggestion, but it was definitely a working animated gif that I uploaded...  ;-D

Mon, 03/17/2014 - 20:37 | 4561341 Andre
Andre's picture

Sounds like the end of the Soviet era. Nobody really knew what was happening in the economy until they could steal the classified CIA economic appreciation report.

Mon, 03/17/2014 - 20:22 | 4561283 messymerry
messymerry's picture

So, what happens to gold in a flagstation event?  Sigh oh well, maybe I should sell a kidney.

;-D

OBTW:  My stupid animated GIF avatar won't work.  Any suggestions?

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