The US Department Of Commerce Officially Jumps The Shark, Will "Double Seasonally Adjust" GDP Data

Tyler Durden's picture




 

It's official: after seeing it work so well for years in China, the US Department of Commerce's Bureau of Economic Statistics has officially replaced all of its excel models with just one function. The following:

As Steve Liemsan hinted a few days ago, in what we thought was a very belated April fools joke, th eBEA has finally thrown in the towel on weak seasonally-adjusted US GDP data, and as a result has decided to officially proceed with a second seasonal adjustment: one which will take all the bad data, and replaced it with nice and sparkly, if totally fake and goalseeked, GDP numbers.

As Bloomberg reports, "the way some parts of U.S. gross domestic product are calculated are about to change in the wake of the debate over persistently depressed first-quarter growth. In a blog post published Friday, the Bureau of Economic Analysis listed a series of alterations it will make in seasonally adjusting data used to calculate economic growth. The changes will be implemented with the release of the initial second-quarter GDP estimate on July 30, the BEA said."

In other words, as of July 30, the Q1 GDP which will have seen its final print at -1% or worse, will be revised to roughly +1.8%, just to give the Fed the "credibility" to proceed with a September rate hike which means we can now safely assume not even the Fed will launch a "hiking cycle" at a time when the first half GDP will print negative (assuming the Atlanta Fed's 0.7% Q2 GDP estimate is even modestly accurate).

Will abnormally "good" data be revised lower, or whether labor market data, which is already manipulated beyond comparison by the BLS will also be adjusted due to "residual seasonality"? Don't hold your breath.

And since economists pride themselves in giving complex names to what even 5 years olds now grasp is open data manipulation, the technical term the BEA will use to goalseek historical data is now also clear: "residual seasonality"

Although the agency adjusts its figures for seasonal variations, growth in any given first quarter still tends to be weaker than in the remaining three, economists have found, a sign there may be some bias in the data. It’s a phenomenon economists call “residual seasonality.”

More details on how economics has just devolved into a complete farce on a scale that even the Chinese Department of Truth will find laughable:

“BEA is aware of the potential for residual seasonality in GDP and its components, and the agency is looking for ways to minimize this phenomenon,” the division said in the post. More information will be available in a BEA Survey of Current Business report scheduled for mid-June publication.

 

The agency is exploring ways to address possible issues in measures of federal government defense spending, where research has shown that first- and fourth-quarter growth rates are lower on average, the BEA said, reiterating a statement given to Bloomberg published May 18.

 

It will also start seasonally adjusting some inventory components that currently aren’t, and also some data from the U.S. Census Bureau’s quarterly services survey, it said. The latter should boost the accuracy of consumer spending estimates, it said. The changes to the calculations will cover the period from 2012 to the present.

 

Additionally, the BEA is reviewing all series that figure into the GDP calculations to find and fix any leftover biases that exist within its current methodology.

And to complete the total collapse of US reporting integrity, here is the full BEA blog post on the topic of goalseeked data, aka "residual seasonality."

* * *

BEA Works to Mitigate Potential Sources of Residual Seasonality in GDP

The Bureau of Economic Analysis (BEA) is working on a multi-pronged action plan to improve its estimates of gross domestic product (GDP) by identifying and mitigating potential sources of “residual” seasonality. That’s when seasonal patterns remain in data even after they are adjusted for seasonal variations.

Each spring, BEA conducts an extensive review–receiving updated seasonally adjusted data from the agencies that supply us with data used in our calculation of GDP. Most of the data the feeds into GDP is seasonally adjusted by the source agency, not BEA. At the same time, BEA examines its own seasonal factors for those series that BEA seasonally adjusts itself. All that work takes place in preparation for BEA’s annual revision to GDP and its major components, which will be released on July 30.

As a result of this ongoing work, BEA is aware of the potential for residual seasonality in GDP and its components, and the agency is looking for ways to minimize this phenomenon.

• One of the areas we’re currently reviewing is possible residual seasonality in measures of federal government defense services spending. Initial research suggests that the first and fourth quarter growth rates are lower on average than those of the third and second quarters. BEA is developing methods for addressing what it has found.

• Time frame to implement: Improvement will take place with the release of second quarter GDP on July 30. Period covered: 2012, 2013, 2014, and forward.

• BEA also will begin adjusting certain inventory investment series that currently aren’t seasonally adjusted.

• Time frame to implement: Improvement will take place with the release of second-quarter GDP on July 30. Period covered: 2012, 2013, 2014, and forward.

• Also as part of this year’s seasonal adjustment review, BEA is planning to seasonally adjust a number of series from the Census Bureau’s quarterly services survey that now have sufficient time spans to which seasonal adjustment techniques can be applied. Currently, these series are smoothed using a four-quarter moving average to attempt to smooth out seasonal trends in the data. While BEA’s review had not identified residual seasonality in the PCE services estimates, applying statistical seasonal adjustment techniques to these indicators will improve the accuracy of the underlying trends in PCE estimates.

• Time frame to implement:  Improvement will take place with the release of second quarter GDP on July 30.  Period covered 2012, 2013, 2014, and forward.

• BEA will review all series entering the GDP calculations to identify, and where feasible, mitigate any residual seasonality within its existing seasonal adjustment methodologies.

• Time frame to implement: Review will take place with the release of second-quarter GDP on July 30. Period covered: 2012, 2013, 2014, and forward.

• Longer term–beyond July 30–BEA will continue looking at components of GDP to determine if there are opportunities to improve seasonal adjustment methodologies.  Should BEA identify other areas of potential residual seasonality, BEA will develop methods to address these findings. If research suggests that residual seasonality originates with already seasonally adjusted source data, BEA will work alongside its source data agencies to determine the appropriate course of action.

* * *

Some further thoughts: when, not if, the Fed's rate hike leads to a recession, that too will be seasonally adjusted away. And QE4 will be called tightening in the name of "residual seasonality."

And, of course, once the Fed's credibility finally crashes, its seasonally adjusted credibility will be at an all time high.

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Fri, 05/22/2015 - 13:56 | 6122201 ted41776
ted41776's picture

hahahahahaha    we swindled some folks

Fri, 05/22/2015 - 14:03 | 6122223 silver_stacker
silver_stacker's picture

If at first you don't succeed..tweek the bullshit some more...

Fri, 05/22/2015 - 14:07 | 6122250 JRobby
JRobby's picture
The U.S. Is About to Change the Way It Calculates GDP !!!!!

http://www.bloomberg.com/news/articles/2015-05-22/gdp-changes-coming-in-...

Clown show

Fri, 05/22/2015 - 14:08 | 6122253 0b1knob
0b1knob's picture

In Soviet America, shark jumps you!

Jackoff Smirnoff

Fri, 05/22/2015 - 14:09 | 6122259 whotookmyalias
whotookmyalias's picture

I need one of those for my checking account.  Think the Credit Union will notice?

Fri, 05/22/2015 - 14:10 | 6122262 ThaBigPerm
Fri, 05/22/2015 - 14:17 | 6122284 Deathrips
Deathrips's picture

Ill make it easier....

 

GDPx1x1x1x1x1= 5x GDP

 

Common Core Bitchez....!

Now someone pass me that bag of unicorn farts to huff.....

 

FIFY

RIPS

Fri, 05/22/2015 - 14:26 | 6122296 AIIB
AIIB's picture

The most important 'seasonally adjusted' shark jumping feat ~ SINCE FONZ!

https://www.youtube.com/watch?v=t4ZGKI8vpcg

 

In OTHER shark jumping news...

 

http://www.msn.com/en-us/news/world/indonesian-woman-who-offered-to-wed-...

Fri, 05/22/2015 - 14:26 | 6122330 pods
pods's picture

Hey, start with the conclusion and work backwards! Perfect.

Works for "climate science" why not try it for economics?

pods

Fri, 05/22/2015 - 14:52 | 6122362 Manthong
Manthong's picture

OMG..

We are all Animals

https://www.youtube.com/watch?v=Y0cF2piwjYQ


Was that Lennon or Belushi.. I forget.

 

Fri, 05/22/2015 - 15:17 | 6122522 inhibi
inhibi's picture

should read "residual bullshit"

Fri, 05/22/2015 - 15:33 | 6122586 Obchelli
Obchelli's picture

But what is even more amusing everyone also pretends to beleive it and salivate all over - want to smack this ANALysts when I see how confidently they talk about US recovery....

Fri, 05/22/2015 - 15:52 | 6122647 MonetaryApostate
MonetaryApostate's picture

2 + 2 = 239847/289^2-687349/300 - 0.729652023642756512334223329063 = The New Rules of Global Finance 4 The World.

Fri, 05/22/2015 - 16:30 | 6122789 Captain Debtcrash
Captain Debtcrash's picture

If the doubly seasonally adjust winter up they must doubly season adjust summer up, correct?  

Fri, 05/22/2015 - 17:12 | 6122892 knukles
knukles's picture

Don't be a jerk 'cause the model don't work

Fri, 05/22/2015 - 17:41 | 6122971 espirit
espirit's picture

Stick a fork in it, it's done.

Anybody with skin in the game has been forewarned.

Fri, 05/22/2015 - 18:05 | 6123032 Say What Again
Say What Again's picture

Its OK, I can handle this one.  I took many years of complex algebra, diff-equations, and non-euclidean geometry.  Can someone please get me a drink while I fix this mess.

Fri, 05/22/2015 - 18:09 | 6123044 Automatic Choke
Automatic Choke's picture

double.....double.....double....

oh yeah:

https://www.youtube.com/watch?v=vVXEQ8hjyGI

 

Fri, 05/22/2015 - 18:19 | 6123071 Say What Again
Say What Again's picture

OK, I've been making great progress on this GDP equation stuff, but I keep hitting one problem in the solution.

SQRT(-1)

Does the group out there have any ideas?

Fri, 05/22/2015 - 19:14 | 6123176 countryboy42
countryboy42's picture

I looked over your figures and I think I may have found the problem. You forgot to include the square root of stupid. Try adding that in, and you may come up with a number that comes close to this fucking bullshit .gov answer.

Sat, 05/23/2015 - 12:25 | 6124641 Hyjinx
Hyjinx's picture

That would be an imaginary number - exactly what we are dealing with so good job!

Fri, 05/22/2015 - 17:44 | 6122978 McCormick No. 9
McCormick No. 9's picture

In a world of lies, the only enemy is the truth.

Sat, 05/23/2015 - 15:57 | 6125093 SWRichmond
SWRichmond's picture

We've always been at war with EastAsia.

Fri, 05/22/2015 - 18:52 | 6123143 johngaltfla
johngaltfla's picture

Totally false formula because you left out pi ...you can't have a legit solution with out pi.

Sat, 05/23/2015 - 12:46 | 6124686 TheReplacement
TheReplacement's picture

To reach happy ending must eat pi @ (y).

Fri, 05/22/2015 - 15:38 | 6122601 mvsjcl
mvsjcl's picture

"Hey, start with the conclusion and work backwards! Perfect."

 

Pods, you just described the 9/11 Commission findings!

Fri, 05/22/2015 - 18:40 | 6123125 Mentaliusanything
Mentaliusanything's picture
They are free to evade reality, they are free to unfocus their minds and stumble blindly down any road they please, but they are not free to avoid the abyss they refuses to see.”
Fri, 05/22/2015 - 14:08 | 6122254 Fukushima Sam
Fukushima Sam's picture

That's the problem with lying; once you start you must tell increasingly greater lies to cover the original ones.

Fri, 05/22/2015 - 14:16 | 6122291 orez65
orez65's picture

"once you start you must tell increasingly greater lies to cover the original ones"

Very true.

Even worse when we have a fiat money system whose foundation is theft.

The derivative of theft is corruption.

Fri, 05/22/2015 - 14:32 | 6122353 thepigman
thepigman's picture

Don't forget all the other adjustments they made to boost GDP back in 2013 and of course, we still don't (cough) mark to market, nor

will we ever again.

Fri, 05/22/2015 - 14:49 | 6122405 max2205
max2205's picture

If your pens is 5 in you need to tell her it's 9 in

When the fly is unzipped it's too late....sheep got to swallow 

Fri, 05/22/2015 - 15:30 | 6122580 new game
new game's picture

"once you start you must tell increasingly greater lies to cover the original ones"

eventually someone gets hurt very bad, so bad they can't breath...

Fri, 05/22/2015 - 21:43 | 6123496 eclectic syncretist
eclectic syncretist's picture

The data are being shaped around a policy of raising interest rates in order to support the dollar, which is closer to the precipice than most imagine.

Sat, 05/23/2015 - 12:10 | 6124614 SDShack
SDShack's picture

Exactly correct. The world is entering the Currency War Cage Match to the Death. The BRICS and others saw what happened with the Arab Spring, when the sheeple revolted because of runaway food and fuel prices, causing weak govts to fall, all aided by the West fiat banking system that sacrifices every other currency for the dollar. Now these BRICS leaders realize they are closer to the guilotine then they are Western Bombs, so they are saying "Fuck You", and looking for any alternative to the slavery of the US dollar. The Western Banks are not going to go away without the Mother of all fights, all the way to WWIII if necessary.

Fri, 05/22/2015 - 15:00 | 6122452 magnumpk
magnumpk's picture

But as George Costanza said, "It's not a lie if you believe it."

Fri, 05/22/2015 - 15:09 | 6122486 saints51
saints51's picture

Leave it to an ashkenazi satanist.

Fri, 05/22/2015 - 15:18 | 6122529 csmith
csmith's picture

"...increasingly greater lies..." 

 

Oh, you mean QE1, 2, 3, 4...etc.

Fri, 05/22/2015 - 14:40 | 6122377 Fun Facts
Fun Facts's picture

Soon just making shit up will be official policy for the idiocracy.

Fri, 05/22/2015 - 15:37 | 6122597 Tall Tom
Tall Tom's picture

Soon?

 

Make believe IS official policy for the idiocracy...NOW.

Fri, 05/22/2015 - 14:07 | 6122236 NoDebt
NoDebt's picture

Bookmark this.  Now that the "old" method is replaced by the "new" method, I want to see some old vs. new comparisons a year or two from now.  Because nobody will care what number the "old" method will spit out any more.  Sort of like comparing today's CPI numbers with those from the 80s.

Upward GDP bias, anybody?  You bet your ass.

I TOLD YOU none of us would live long enough to see the next declared recession.  And here you go.

While I'm good and fucking worked up, I also need to say:  STEVE FUCKING LIESMAN??  He's not even a fucking economist.  He's got a degree in journalism.  And he doesn't even do that well.  Annoying prick who talks over all the guests like he's king shit or something.

Fri, 05/22/2015 - 14:08 | 6122252 twh99
twh99's picture

Shadowstats will probably do it.  They do the comparisons now for several economic indicators that have changed over the past 30 years (like CPI).

Fri, 05/22/2015 - 14:28 | 6122337 pods
pods's picture

Right out of 1984.

20>30.

Nuff said.

Fri, 05/22/2015 - 14:45 | 6122387 Omen IV
Omen IV's picture

as everyone loses confidence in what is reported for ALL metrics the BLS puts out - for those who can pay the cost there will be new standards of performance for the ecconomy set up and sold dearly for access

The average investor will fly blind right into a wall that the big guys know is there and will not be able to do anything about it.

This is another form of rents- reliable standards going away

Fri, 05/22/2015 - 17:11 | 6122891 JRobby
JRobby's picture

Liesman, it's all in the name. Liesman should be euthanized immediately. Fuck moronic yes man makes me puke.

Sat, 05/23/2015 - 07:33 | 6124123 yogibear
yogibear's picture

Like many other reasons people have shut off that pump-channel.

Nearly everyone on that channel has PhD in oligarchy  boot-licking.

Advertisers are throwing away their money posting anything on CNBC. Just write-offs for them

 

Fri, 05/22/2015 - 14:17 | 6122294 doctor10
doctor10's picture

why the hell exactly should we the people keep paying these fools' salaries and pensions?

The Dept has clearly outlived its usefuleness to America

 

 

Fri, 05/22/2015 - 14:26 | 6122329 DeadFred
DeadFred's picture

We pay them because people with guns tell us we should. Don't fool yourself that there is any other reason.

Fri, 05/22/2015 - 13:57 | 6122204 freddymercury
freddymercury's picture

Why not multiply by 10?

Fri, 05/22/2015 - 14:00 | 6122219 813kml
813kml's picture

You're hired!!!

Fri, 05/22/2015 - 14:10 | 6122256 Ignatius
Ignatius's picture

What if you get to 10 and ten just isn't enough?

"It goes to eleven."

Do NOT follow this link or you will be banned from the site!