The Biggest Washington Whopper Yet

Tyler Durden's picture

Submitted by David Stockman via Contra Corner blog,

You can’t find lazier people than in the mainstream financial press, but their exuberant cheerleading about the purported 5.2% gain in the real median household income in 2015 surely was a new high in mendacity. And we are not talking about the junior varsity here: The Washington Post was typical with a headline of superlatives followed by even more exuberance in the text:

U.S. household incomes soared in 2015, recording biggest gain in decades………The data represents the clearest evidence to date that the nation’s long, slow and topsy-turvy economic recovery has finally begun to deliver prosperity for wide swaths of workers.

The self-evident fact is that the median household couldn’t have had an after-inflation income gain of 5.2% in 2015. There is not a single data point in the mountains of “incoming” economic data that is consistent with that proposition. Yet nothing in the Post story, or any other mainstream coverage, even hints that the Census Bureau’s whopper isn’t on the level.

In the context of what was by all accounts a sputtering economy during 2015, in fact, the Census Bureau unleashed the largest year-over-year gain in recorded history. But not a single reporter smelled a fish.

Whitehouse_household_income_percent_change

So let’s first put in perspective these ballyhooed claims about the purported 2015 gains. The latter still represents nearly a 17% real shrinkage of the median income since the year 2000, if you use an honest measure of inflation like our Flyover CPI; and a 2.2% decline even when incomes are deflated by the BLS’ sawed-off inflation measuring stick called the CPI-U-RS.

Either way, there is absolutely nothing to celebrate about a trend that has headed south longer than anytime in modern US history.

Real Median Income Deflated Two Ways - Click to enlarge

But even the 2015 numbers make no sense in their own right. Start with the Census Bureau’s “money income” data which is the basis for its claim that the median household income leapt higher last year by the greatest amount ever recorded. Hidden in its presentation of “real” dollars is the assumption that aggregate money income for all 125.8 million US households rose by 5.7% in nominal terms last year.

But how was that possible when nominal GDP increased by only 3.0% during 2015? Likewise, disposable personal income—again in nominal terms—-grew by just 3.7%.

The fact is, the median income can grow nearly twice as fast as aggregate income only if gains in the middle and bottom of the income ladder grew far faster than the total income pie. And that includes the big bucks earned by bankers, athletes, lawyers, business executives and the rest of the white collar elites.

To the contrary, the Census Bureau’s own report shows that the median nominal earnings of full-time male workers in 2015 grew by 1.6% and for full-time female workers by 2.8%. That hardly squares with 5.7% average aggregate growth of incomes for all workers—unless main street households was suddenly showered with windfalls from stock dividends they don’t own, bank accounts that pay no interest or rental incomes from properties registered in someone else’s name.

Even when you allow for gains in the number of workers employed in 2015 over prior year, which was about 2%, it still doesn’t add up. The total wage bill for all workers grew by just 4.2% in nominal terms during 2015. That’s by the Census Bureau’s own reckoning (table A-4), and that’s also before inflation!

Then again, when we look at the deflator used in the report—-even more red flags arise. To wit, according to the BLS’ CPI-U-RS, the cost of living in main street America, where presumably the median household resides, only increased by 0.1% last year.

That’s right. The report claims that the inflation index only rose from 347.8 to 348.2 during the entire year. Never mind that medical costs were up by 3.6%, housing rents by 3.5% and food by 1.4%. Allegedly, falling oil prices off-set all of that—-even though energy accounts for less than 9% of the CPI.

All of this suggests that there must be something in the footnotes hinting that the Census Bureau might have moved the goal posts, and indeed that is exactly the case.

Starting in 2013 with a partial phase-in, which was fully implemented in 2014, Census changed the questions and the methods it uses in calculating the “money incomes” of households. During 2014, for example, it started to “collect the value of assets that generate income if the respondent is unsure of the income generated.”

It also helpfully filled in the questionnaire where respondents answered with “don’t know” or where they “refused” to answer with its own quesstimates about what the answer should have been!

For instance, as a result of this “improved reporting” of interest income, the number of recipients increased by 41.6% and the aggregate amount of interest collected soared by 111.7%, according to John Williams at Shadow Statistics.

That’s right. During the entire course of 2015 the Fed kept savers lashed to the zero bound, but interest income surged by triple digits.

Even more preposterously, according to Williams its new counting methods “upped the number of recipients of money from IRA, Keogh and 401k withdrawals by 419.5%, increasing aggregate income in that area by 230.1%

Needless to say, raiding your retirement fund is not “income” in the first place; it’s a liquidation of assets that were earned and counted in earlier periods.

All this blatant fiddling, of course, was described in purely clinical terms:

“The data for 2013 and beyond reflect the implementation of the redesigned income questions.”

When you look at the broken trend after 2014, however, it all begins to make sense. That is, the Census Bureau fudged the report just in time for the 2016 elections. Otherwise, how do you explain the chart below?

How did the 2.4% growth trend for money incomes between the 2008 pre-recession peak and 2014 suddenly rear up on its hind-legs and leap upwards by 5.7%?

Aggregate Money Income- Click to enlarge

In short, there is nothing which can explain this phony 5.2% headline gain except election year manipulation and spin. In fact, if the median fulltime worker weighted for the male/female mix gained only 2.01% in after-inflation wages in 2015 there is flat-out no way that the median household could have gained 5.2%.

The only possible reconciliation is if the average household size had suddenly increased in 2015 because even more kids moved into mom and dad’s basement. That didn’t happen, however. The average household size last year was 2.53 persons or virtually identical to the 2.54 persons of the previous year, and the 2.535 average of the past four years.

Indeed, contrary to all the self-congratulations coming out of the White House, we must note that what is actually buried in this report on household incomes and poverty is actually quite appalling. For instance, we calculated the real median income for black households under the same methodology displayed above for all households.

It turns about that the real median income is down by 23% over the last 15 years when the Census Bureau data is deflated by the Flyover CPI, and nearly 10% based on the BLS index.

Black Households Real Median Income - Click to enlarge

It might be wondered, therefore, why a one-year blip, which is already reversing, is anything to celebrate. Perhaps the clueless Washington Post reporter who supplied the above obsequious commentary has not yet heard that the Fed hasn’t outlawed the business cycle.

After all, do not the above trends make clear that the cyclical highs are getting lower and the lows are getting even lower?

Indeed, as we showed in a some related graphs yesterday, look out below when the currently approaching recession hits household incomes with full force. To wit, new business are not being formed at anything near their historic rates, yet the BLS keeps padding the monthly jobs count with imaginary jobs.

Screen Shot 2016 09 16 at 7.33.46 AM

We call it the “birther” theory of the labor market. It turns out that 52% of all the new jobs—-5.25 million—-reported by the BLS since the end of the recession were imagined, not counted.

This amounts to still another whopper from the government statistical mills, and more evidence that the so-called recovery is based on a tissue of lies.

 

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roxyNL's picture

Is it possible to have the median increase for the goyim and the  ((( chosen ones ))).

I think that the majority of the 5.2% increase has been re-routed to the ((( cartel ))) people

Stuck on Zero's picture

Actually, that magical income spurt came from illegal hooch sales, prostitution, gambling, garage sales, baby sitting, and bribes. Nothing new.

philipat's picture

Or perhaps the ACA would be an even bigger whopper? It's a close call but his "legacy" will be in plcae, for a while until history takes its toll, IF the Fed can keep this fucker afloat for a few more months?

813kml's picture

In related news, daydreaming about winning the lottery is now considered a full-time job.

sleigher's picture

I asked a magic 8-ball if I am ever going to win the lottery and the reply was "It is certain".

So I'd be a fool not to play right?  ;) 

East Indian's picture

And any jackpots in such daydreams will be counted as income!

UndergroundPost's picture

Presstitutes are always eager to spread their legs,  esp if it means another dime bag of crack between johns 

Kirk2NCC1701's picture

roxyNL, you are coming along just nicely in the new Era of 'coded truthiness'.

Actually, we CAN speak truth to power and thus spread the message, without getting tripped up on Procedure.

Eventually, when enough peeps wake up, speaking in clear text will once again be possible. I'm guessing.

roxyNL's picture

we live in an orwelian era, better get adapted to the new language if you want to survive !

Consuelo's picture

 

 

+1

 

Here's another coded message - but you'll have to purchase another box of matzoball mix to get the decoder ring:

 

Pharisee Finance.

 

 

Amalgamated Tang's picture

Sell EVERYTHING. Sell it all.

Doan Nonuffin's picture

Buy ammo, buy it all.  Rich have gold, poor have lead.

Rich Stoehner's picture

but MSNBC told me to buy and hold...

Doan Nonuffin's picture

Emperor Chimpypants shinin us on, say it ain't so. 

Buster Cherry's picture

Potemkin Village comes to mind...

847328_3527's picture

Soaring unemployment gives thugs time to riot, otherwise they'd be busy hard at work like the rest of us.

Catullus's picture

So boomers are retiring and withdrawing retirement so this is somehow income? That a whopper.

GeezerGeek's picture

I wonder if SS is part of this income. Mine certainly didn't go up 5.2% in 2015, but if all retired people are aggregated...

NoDebt's picture

Birth/Death adjustment re-enters the ZH lexicon.  Don't call it a comeback (because it never actually went away).

The last 8 years have been the greatest experiment in perception management (lying) I've seen in my lifetime, or even read about in books.  It's not just one or two things here and there.  It's EVERYTHING.  Total full-spectum dominance of lies over the obvious truth.

History will not treat this period well.  

Mr. Magoo's picture

"That's not the way the world really works anymore." He continued "We're an empire now, and when we act, we create our own reality. And while you're studying that reality—judiciously, as you will—we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors … and you, all of you, will be left to just study what we do."

 

Karl Rove

813kml's picture

But history is a lie so everything kind of cancels out.

NoDebt's picture

"It's not a lie if YOU believe it."

- George Costanza

SillySalesmanQuestion's picture

Thanks NoDebt. I'm going to plagerize "perception management" and use it frequently.

mvsjcl's picture

I'd venture to say since 2001, mid-September or thereabouts.

CHoward's picture

The ONLY conspiracy I've ever actually seen with my own eyes is how the federal government consistently lies to the American public on any and EVERY topic, bar none.  It's as normal to lie for them as it is to breathe - both are involuntary but both are real. 

Arnold's picture

Can I interest you in a (front loaded) Annuity?

Protection for your (net negative) bond portfolio?

 

Seriously, I wonder why Stockman gets no traction in his writing / rants.

Oh, plenty here, the choir is always attentive to a preacher.

Perhaps reform is too big a job for 100,000 keyboards to handle.

 

Reposted for a net energy savings of +/- 25%

 

We don't keep lists of Potential Subversive Persons of Interest.

But if we did, we would add this name to it.

 

- John Boehner, the former speaker of the House who left Congress and his leadership post last year, is joining Squire Patton Boggs, a Washington-based law firm long known for its lobbying work. http://nyti.ms/2clbiJm

SillySalesmanQuestion's picture

The Weeping Cheeto is evidently, going to sell his soul a few more times and become a check pickeruper.

Budnacho's picture

The Government Lied?

Shocked I tell you......shocked I am.....

Mewa's picture

Gotta be the Russians...no way its the fault of the Obbi govt.

Seasmoke's picture

The Tribe lies. What did you expect ??

Berspankme's picture

Is this supposed to be news? Everyday i see more desperation out there

GunnerySgtHartman's picture

"If you like your 5.2%, you can keep your 5.2%."

As for those of us in the REAL world, we were lucky to get 1%!

Phoenix Pilgrim's picture

For those of us that followed all the rules, were the first in our family to go to college (self-financed) to obtain BS and MS degrees in Engineering, paid our taxes for 20 years on our (former) six figure incomes, were down-sized and right-size cheated out of our promised $30K/year pensions, were laid off when our have-to-be liquidated-in 60 days-after-layoff stock options were 30% underwater, were replaced by cheap H1-B labor from India and China, lost our 50% downpayment homes while unemployed after the 2008 housing crash, and are now working entry level jobs at half of what we used to make - the misrepresentation of the economic status of the nation is no surprise. 

Raymond K Hessel's picture

If that all happened to you, that is fucked up!

SillyWabbits's picture

http://www.metrolyrics.com/nothing-from-nothing-lyrics-billy-preston.html

 

Nothin' from nothin' leaves nothin'

Except with government statistics.

 

 

Nothin' from nothin' leaves nothin'
You gotta have somethin' if you want to be with me
Nothin' from nothin' leaves nothin'
You gotta have somethin' if you want to be with me

I'm not tryin' to be your hero
'Cause that zero is too cold for me, Brrr
I'm not tryin' to be your highness
'Cause that minus is too low to see, yeah

Nothin' from nothin' leaves nothin'
And I'm not stuffin', believe you me
Don't you remember I told ya
I'm a soldier in the war on poverty, yeah
Yes, I am

------ instrumental break ------

Nothin' from nothin' leaves nothin'
You gotta have somethin' if you want to be with me
Nothin' from nothin' leaves nothin'
You gotta have somethin' if you want to be with me

You gotta have somethin' if you want to be with me
You gotta bring me somethin' girl, if you want to be with me

Songwriters
PRESTON, BILLY / FISHER, BRUCE

Dr. Darkpool's picture

What a day for a daydream.

Mass_hysteria's picture
Mass_hysteria (not verified) Sep 21, 2016 10:08 AM

The mafia is laughing us in the face....haha what bail outs...we can create money out of air if we want but we just want to fuck you peons over so we steal your tax dollars instead

Secret Weapon's picture

If you like your Enron accountant you can keep your Enron accountant.  Seriously, we wouldn't put up with this shit from our employees or our children, why do we let the Feds lie to us like this? We lie to them and we go to prison.  They lie to us and nothing happens.  Doesn't seem right.  They lie to us and they should go to prison. 

Mass_hysteria's picture
Mass_hysteria (not verified) Secret Weapon Sep 21, 2016 10:10 AM

The mafia doesn't go to prison remember. They own the prisons haahah

Pigeon's picture

Several of my leftist "friends" used to shit bricks about "enron" "ken lay" "hallburton", "trillions on war"  etc.

Now? Not a fucking peep. The hypocrisy is stunning. And goes to show me these people are completely unprincipled. Either than or their brains have over-loaded and burnt up from the extreme cognitive dissonance.

But I would go with "unprincipled". The decline of Western Civilization. Too few give a shit unless it benefits them directly in terms of cash or power - preferably both.