US administration still trying to hide the recession

Alright, so today we had the great relief to see that the US GDP rose by 1.9%
Pfeeew!!! No recession, the economy is sound and growing!

But, the market was expecting a lot more than that (2.3% consensus) ; which also rises the question about how much the market can be that irrational.

Bur more importantly, the Chain Deflator used to deflate the GDP from inflation has dropped to 1.1% from 2.6% in the previous quarter.

With inflation rising at record rate and being very hide, it's amazing to see a deflator of 1.1% and see it drop.

Well done! That's creative accounting and artistic number reporting!

Mish exposes BLS BS

From this post, Mish exposes what is really happening in the US compared to the official figures from the BLS.

Commercial filings for the first half of 2008 are up 45 percent from last year, as the national climate for commerce continues to deteriorate amid rising energy and food costs, mounting job losses, tighter credit and a reticence among consumers to part with discretionary income.

From April through June, 15,471 U.S. businesses called it quits, according to data from Automated Access to Court Electronic Records, an Oklahoma City bankruptcy management and data company.

It was the 10th straight quarter that business bankruptcy filings have increased. Nearly 29,000 companies filed in the first half of 2008. Another 60,000 to 90,000 others probably have closed, because roughly two to three businesses fold for every one that files for bankruptcy, said Jack Williams, resident scholar at the American Bankruptcy Institute.

[...]

The BLS reported net expansion of new businesses in all but 3 of the past 15 months. January and July are months in which they partially correct for the ridiculous assumptions made in the other months.

Data on Housing Relief Questioned

David Cho and Renae Merle, Washington Post Staff Writers, report that:

Banks and mortgage firms are providing questionable information about the number of subprime mortgage borrowers they are helping and the rate at which homeowners are falling into foreclosure, according to the top regulator for the nation's largest banks.

Those details are crucial for regulators to gauge the severity of the housing crisis and evaluate the effectiveness of the steps lenders are taking to address the problems.

(hat tip Tanta@CalculatedRisk)

"Wildly Creative" employment report in the US [updated]

I am happy to see that I am not the only one to consider the figures coming out of the BLS as total rubish and see that actually quite few people seem to be concerned about the way employment figures are calculated by the BLS in the US.

I will just relay Mish's posts here. On the 5th of June 2008, he wrote:

Friday we get to see how creative the folks at the BLS get with their birth/death model. Whatever it is, the mainstream media is likely to put lipstick on a pig.

And we got the confirmation on the 6th of June's employment report, and Mish's comment:

Once again the BLS should be embarrassed to report this data. Its model suggests that there was 42,000 jobs coming from new construction businesses, 23,000 jobs coming from professional services, and a whopping 217,000 jobs in total coming from net new business creation. The economy has slowed to a standstill and the BLS model still has the economy expanding quite rapidly.
[...]
This report was the 6th consecutive disaster, and 5th consecutive contraction. Service jobs were only positive because 17,000 useless government jobs were created. Somehow we are supposed to believe the economy is not in recession.

For those unfamiliar with the way the BLS "counts" the number of unemployed people, and their death/birth model, you will learn a great bunch of things from Mish's post.


Here are some more figures, as found in "Employment Situation Worsening" by Anthony Cherniawski, The Practical Investor, LLC | June 9, 2008:

The CES Birth/Death Model added 217,000 hypothetical jobs in May, so the real number may have been –266,000 in May instead of the –49,000 enumerated by the BLS. According to the government statistics, we added 77,000 hypothetical leisure & Hospitality jobs and 42,000 hypothetical Construction jobs in the month of May. At the same time, those marginally attached to the workforce (seeking full-time work, but only employed part-time) increased in May.

In summary, the U.S. lost jobs for a fifth month and the unemployment rate rose by the most in more than two decades, as an influx of students into the workforce drove the biggest jump in teenage joblessness since at least 1948.

It's official, there is no inflation in the US

Core CPI rose 0.1% in April 2008 while the CPI rose 0.2%.
I am happy to see that everything is going just fine in a perfect world. Or is it?

Looks like I am not the only one believing that all the figures are false

In his editorial titled Opportunity on a Silver Platter Jim Willie explains why he believes most the figures including GDP and unemployment rate have been manipulated and why the current recovery is a "sucker's recovery" (the new buzz word I am hearing everywhere for the past few days).

Employment figures in the US manipulated as well?

According to Karl Denninger from Market Ticker, last week's employment figures in the US could also have been manipulated to look better than the actual ones:

The employment number (which The Fed had, by the way) came out and its better than expected - but negative.

Why not down huge? Government hiring. Lots of it. Oh, and a "Birth/Death" adjustment of over a quarter of a million jobs - fictional jobs, I argue.

"Birth/Death" is a model attempt to count small businesses that otherwise don't get counted, and either die or are born. Let me ask you - drive around your town - are small businesses going under or starting up? On balance.

Well, the BLS says they are starting up to the tune of over 250,000 jobs in the last month alone. Do you believe it?

Then let's add that we now have 306,000 people who are now working part-time for "economic reasons." This, by the way, are people who were full-time employed and are now part-time. 306,000. Oh, and that's 849,000 people more than the same time last year. And average weekly earnings were down.

And also, according to Anthony Cherniawski from The Practical Investor, LLC

The press headline reads, “ Nonfarm payrolls down 20,000; unemployment rate unexpectedly falls.” Folks, these numbers have been massaged to get the “right” outcome.

For example, in April, the number of persons working part time for economic reasons increased by 306,000 to 5.2 million. This level was 849,000 higher than in April 2007. These individuals indicated that they were working part time because their hours had been cut back or because they were unable to find a full-time job. 5.2 million workers comprise 3.8% of the alleged workforce.

Another example is the CES Birth/Death Model, which added 267.000 fictitious jobs to the employment data. The reason I say fictitious is the way they are distributed. For example, the model suggests that 83,000 jobs were added in Leisure and Hospitality, 72,000 jobs were added to Professional and Business Services and 45,000 jobs were added to the Construction Sector.