US unemployment is really 19.8%

scipio

I am aware of John Williams www.shadowstats.com which was good port of call to see the crisis brewing.
This is a good article that goes into it a bit: http://www.marketoracle.co.uk/Article9960.html

nesf

Well, it's just down to how you define unemployment. Whether the number should include those who don't want to work or not is a matter of opinion, what's important is that you define clearly who is included and who is not.

The main problem comes from the media blithely reporting these statistics without explaining the assumptions and limitations of them. The main issue here is defining the potential labour force of a country and deciding who is outside of it.

eamonnm79

Thanks for this post, and especially the link I knew that many of the figures that the american government are using are very flawed (inflation, prison population, GDP) I guess this is just another example.

Économiste Monétaire

eamonnm79 wrote: »

Thanks for this post, and especially the link I knew that many of the figures that the american government are using are very flawed (inflation, prison population, GDP) I guess this is just another example.

In your own words, why exactly is the BLS CPI measurement methodology flawed?

eamonnm79

Économiste Monétaire wrote: »

In your own words, why exactly is the BLS CPI measurement methodology flawed?

Thanks for the Sara Palin style test.
How insulting of you.

But if you genuinely believe that the vast majority of economics stats you read are not politicised you should probobly buy some duct tape.

silverharp

it is interesting if you compare the Case Shiller (CS-CPI)index to the CPI , it seems to capture why the Fed should have raised rates much earlier in the cycle. The OER component in the CPI seems to have understated inflation on the way up and overstate it on the way down, the bond market seemed to have sniffed it out correctly along the way.

Time Magazine

eamonnm79 wrote: »

Thanks for the Sara Palin style test.
How insulting of you.

But if you genuinely believe that the vast majority of economics stats you read are not politicised you should probobly buy some duct tape.

To be fair you're the one claiming the data is flawed, it's your job to back that assertion up, not EM's job to cover his mouth in duct tape about it.

Économiste Monétaire

eamonnm79 wrote: »

Thanks for the Sara Palin style test.
How insulting of you.

But if you genuinely believe that the vast majority of economics stats you read are not politicised you should probobly buy some duct tape.

Still weighting for the great treatise on flawed CPI methodology.

eamonnm79

Économiste Monétaire wrote: »

Still weighting for the great treatise on flawed CPI methodology.

Treatise, nice word, still not biting.
While you are weighting you might want give peoples cop on a higher weighting and lower weighting to manipulated stats.
If you actually want to see where the CPI is wrong, follow the link on the post.
I suspect you are not looking for info, but ammo to say what an ignoramous I am.
Thats insulting.
BTW The economist, you missed the joke, the tape is not for that particular hole. :eek:

Guys all I am saying is that much of the stats used in economics are Fuzzy. And I am saying that a lot of the fuzziness is not an accident.
I am saying it in a general way, if anyone thinks that im wrong, no problem, its just an opinion.

Time Magazine

eamonnm79 wrote: »

If you actually want to see where the CPI is wrong, follow the link on the post.

I did and wasn't impressed. I saw nothing of substance, just someone trying to claim they're better at displaying statistics than well-respected bodies.

I suspect you are not looking for info, but ammo to say what an ignoramous I am.
Thats insulting.

And I suspect you're being ridiculously paranoid. You've claimed that data is subject to widespread political manipulation. If this is true it has massive implications for econometrics. It's about the equivalent of claiming half the Dáil are taking bribes and not backing it up.

BTW The economist, you missed the joke, the tape is not for that particular hole. :eek:

Be a bit more civil in future please.

Guys all I am saying is that much of the stats used in economics are Fuzzy. And I am saying that a lot of the fuzziness is not an accident.
I am saying it in a general way, if anyone thinks that im wrong, no problem, its just an opinion.

This forum has recently moved to the Science category. This was primarily to increase the standard of debate. You cannot go around making claims like "I knew American GDP was incorrect" and then claim later "It's only an opinion" without backing it up. That's really not the point of this forum. Contrary to what you think, we're happy to be challenged here. However we are also more than happy to challenge.

Économiste Monétaire

eamonnm79 wrote: »

Treatise, nice word, still not biting.

Yes, treatise, an oft used word on the plains of academia. It's in no way surprising that you make light of its use, as if it were a special occasion.

eamonnm79 wrote: »

While you are weighting you might want give peoples cop on a higher weighting and lower weighting to manipulated stats.

So, they're manipulated but you utterly fail to explain why that is. This isn't an axiom, you need to show why the CPI methodology is flawed. Your first statement carried the presupposition that, before you read the link, you knew they were "very flawed." If you already knew that, then you can easily explain why. Even first year economics undergraduates are shown the failure of vanilla CPI to be a perfect proxy of a COLI.

eamonnm79 wrote: »

If you actually want to see where the CPI is wrong, follow the link on the post.

Nah. Enlighten me with all of your knowledge of CPI methodology.

eamonnm79 wrote: »

I suspect you are not looking for info, but ammo to say what an ignoramous I am.
Thats insulting.

That's self-evident. What is an ignoramus (highlighting the irony of misspelling the word :rolleyes:) here? Someone lacking knowledge, by definition. You can see where the logic goes from this point, considering you really have no idea what you're talking about. That's a mark of a lot of the garbage you post here.

eamonnm79 wrote: »

BTW The economist, you missed the joke, the tape is not for that particular hole. :eek:

Keep your BDSM fantasies away from me, thanks.

eamonnm79 wrote: »

Guys all I am saying is that much of the stats used in economics are Fuzzy. And I am saying that a lot of the fuzziness is not an accident.
I am saying it in a general way, if anyone thinks that im wrong, no problem, its just an opinion.

No, you made a claim. You appear not to understand the purpose of a discussion board.

Time Magazine

Économiste Monétaire wrote: »

Yes, treatise, an oft used word on the plains of academia. It's in no way surprising that you make light of its use, as if it were a special occasion.

I'm sure I'm not the only one who reads this and thinks "**** **** **** ****, academic snobbery, **** ****."

EM, eamonnm79 had made a point which is more than open for attack, i.e. his claim that data is systematically skewed. Evidently I take your side on this bit of the debate. Feel free to crucify him on that point. But please don't make this personal, even if you feel he already has; I have already asked the same of him.

Thanks.

scipio

The Economist wrote: »

"...well-respected bodies". They may be well respected but they've also been completely wrong about the crisis, didn't see it coming at all. Using flawed stats is one of the reasons for their blindness on the developing crisis. John williams site was mentioned by many of those that predicted the imminent debt deflation, you can't analyse correctly if the data you use is flawed.

Time Magazine

Not all data collection agencies make predictions and the power of the forecasting techniques of those that do have little relevance to how accurate the historical statistics these agencies provide.

So basically even if the CSO didn't predict the crisis, it doesn't affect how accurate their figure for what inflation in 1998 was.

silverharp

The Economist wrote: »

Not all data collection agencies make predictions and the power of the forecasting techniques of those that do have little relevance to how accurate the historical statistics these agencies provide.

So basically even if the CSO didn't predict the crisis, it doesn't affect how accurate their figure for what inflation in 1998 was.

I guess the accusation is that if the numbers have become biased to the downside then economic planners will make less then optimum decisions. Unless anyone is arguing that US interest rate policy was perfect from 2001, then understated inflation data must have played a part in keeping administered rates lower then otherwise should have been

silverharp

silverharp wrote: »

I guess the acqusation is that if the numbers have become biased to the downside then economic planners will make less then optimum decisions. Unless anyone is arguing that US interest rate policy was perfect from 2001, then understated inflation data must have played a part in keeping administered rates lower then otherwise should have been

You are now getting into the issue of interest rate determination, specifically target rules or instrument rules.

If the former, then the CB will just 'react' to the data, though they will have better and wider ranging data sources then we, the public will have.
If the latter, then not only the data, but the type of model used will be vital.
Svensson (European Economic Review 46 (2002) 771 – 780) has a nice paper that is very readable (he has a 70 page monster that is good as well, but this is a good paper). Bernanke also has some interesting comments on the subject. Finally, Blanchard in his 'State of Macro' paper (here) touches on the nature of macro modelling.

Intersting papers in light of the current crises and I haven't cited them here lately!

I guess the main point of this would be that the CB is only as good as the data it get and, much more importantly the model it uses. I would be much more concerned with the Fed, BoE or ECB failing to incorporating house prices over the past decade then national stats offices understating key variables. I don't think that the data will ever be inaccurate enough to be a greater concern then model misspecification.

silverharp

Deleted User wrote: »

I guess the main point of this would be that the CB is only as good as the data it get and, much more importantly the model it uses. I would be much more concerned with the Fed, BoE or ECB failing to incorporating house prices over the past decade then national stats offices understating key variables. I don't think that the data will ever be inaccurate enough to be a greater concern then model misspecification.

I agree, house prices was the bogey , btw when I say biased I mean from a modelling point of view , hedonic adjustments would be one example.

eamonnm79

The Economist wrote: »

I'm sure I'm not the only one who reads this and thinks "**** **** **** ****, academic snobbery, **** ****."

EM, eamonnm79 had made a point which is more than open for attack, i.e. his claim that data is systematically skewed. Evidently I take your side on this bit of the debate. Feel free to crucify him on that point. But please don't make this personal, even if you feel he already has; I have already asked the same of him.

Thanks.

Fair enough,
No more personal insults from me.

Look I am making a general statement that I think that many economic stats are politicised. Because its a general statement I can only give general examples. Here are two examples. www.shadowstats.com and http://www.chrismartenson.com/crashcourse/chapter-16-fuzzy-numbers
Now if you guys like, you can rubbish what these people are staying, but I happen to agree with them.

"For a number of years I conducted surveys among business economists as to the quality of government statistics (the vast majority thought it was pretty bad), and my results led to front page stories in the New York Times and Investors Business Daily, considerable coverage in the broadcast media and a joint meeting with representatives of all the government's statistical agencies. Despite minor changes to the system, government reporting has deteriorated sharply in the last decade or so". -- John Williams

The emporor has no clothes!

My concern is that governmnt reporting in Ireland is also deteriorating.
Some of the information from this months budget are worrying in my opinion.
Many economists and people on this forum have questioned the growth rate predictions which underpin the governments forcasts. Even in the budget itself it is admitted that there is a much higher liklyhood of "downside" than "upside". In other words they are admitting that their predictions are optimistic!
I would suggest that they should be making realistic rather than optimistic predictions.

Time Magazine

Aye, but predictions are hugely different things to historical statistics. Getting a prediction wrong is a much more acceptable than getting last year's inflation wrong.

leninbenjamin

eamonnm79 wrote: »

I would suggest that they should be making realistic rather than optimistic predictions.

and what's a realistic prediction and how do you make them? the best thing available to economists is the stats. unfortunately stats are lagging indicators. if you compare managing an economy to managing a business, while the business accounts will always lag, there's (almost) always fresh sales data for managers to make decisions based upon. there's no equivalent for economists, there's only really the stats which take bleedin' ages to gather, compile, format and run. so there's always going to be a sizeable margin of error. the biggest problem are the idiots who follow predictions like the gospel, without ever taking the time to see where the indicators used to make it came from.

secondly, stats are always skewed to a degree. statistical models are something that look great on paper but are always flawed, due to the number of assumptions needed about the distribution that can in no way be verified. sometimes they are skewed intentionally (like the govt. raising VAT last time round to hide the deflation), other times it's completely unintentional and simply due to ommisions gathering data. The important point is that no one should ever make the assumption stats are completely reliable.

eamonnm79

leninbenjamin wrote: »

and what's a realistic prediction and how do you make them? the best thing available to economists is the stats. unfortunately stats are lagging indicators. if you compare managing an economy to managing a business, while the business accounts will always lag, there's (almost) always fresh sales data for managers to make decisions based upon. there's no equivalent for economists, there's only really the stats which take bleedin' ages to gather, compile, format and run. so there's always going to be a sizeable margin of error. the biggest problem are the idiots who follow predictions like the gospel, without ever taking the time to see where the indicators used to make it came from.

secondly, stats are always skewed to a degree. statistical models are something that look great on paper but are always flawed, due to the number of assumptions needed about the distribution that can in no way be verified. sometimes they are skewed intentionally (like the govt. raising VAT last time round to hide the deflation), other times it's completely unintentional and simply due to ommisions gathering data. The important point is that no one should ever make the assumption stats are completely reliable.

I agree 100% with everything you just said in the second paragraph.
If you look at page 7 of the macroeconomic report in the budget the Dept of finance are openly admitting that their predictions have a greater chance of downside than upside.
INHO in that case they should be revising their predictions downward untill they have, to the best of their abilities, a similar chance of upside and downside.
Straying from this makes their figures optimistic and not very prudent.
Its the mentality in the dept of finance that I am worried about.

nesf

eamonnm79 wrote: »

I agree 100% with everything you just said in the second paragraph.
If you look at page 7 of the macroeconomic report in the budget the Dept of finance are openly admitting that their predictions have a greater chance of downside than upside.
INHO in that case they should be revising their predictions downward untill they have, to the best of their abilities, a similar chance of upside and downside.
Straying from this makes their figures optimistic and not very prudent.
Its the mentality in the dept of finance that I am worried about.

I'd take a slightly different look at it. Basically the problem is the media only partially reporting the prediction, i.e. listing out the projected GDP figures while neglecting to mention the DoF's admission of their predictions having a greater downside than upside risk. They should have been nailed for this slight of hand in the media but they weren't. That's the problem here.

leninbenjamin

nesf wrote: »

I'd take a slightly different look at it. Basically the problem is the media only partially reporting the prediction, i.e. listing out the projected GDP figures while neglecting to mention the DoF's admission of their predictions having a greater downside than upside risk. They should have been nailed for this slight of hand in the media but they weren't. That's the problem here.

spot on.

As I said, if going off stats find out where they come from. people blindly look at the reports in the papers without care in the world and then all of a sudden it's ESRI, or the Dept. Finance's fault that they didn't read the damn thing themselves.

was i just particularly lucky, or are people not taught in school that secondary sources are not to be fully trusted?

nesf

leninbenjamin wrote: »

was i just particularly lucky, or are people not taught in school that secondary sources are not to be fully trusted?

Honestly, I don't think it's reasonable to expect your average person to wade into an ESRI report. The media's job in this is taking these reports and making them intelligible to the man on the street, not just to take the lazy approach and report the headline numbers.

eamonnm79

nesf wrote: »

I'd take a slightly different look at it. Basically the problem is the media only partially reporting the prediction, i.e. listing out the projected GDP figures while neglecting to mention the DoF's admission of their predictions having a greater downside than upside risk. They should have been nailed for this slight of hand in the media but they weren't. That's the problem here.

You are excusing the Dept of finance from their obligation to tell the truth (give as accurite reporting as they can) to the citizens. And your justification is that the journalists should have copped it? We are supposed to live in a Democracy.
Journalists are lazy. The news they give us is 90% what they are fed. My opinions of the media to say the least not good. I am not a million miles from the arguements within Chomskys book Manufacturing concent.
There are just to many vested interests to expect to get the truth in Irish media. One only has to look at the extreemly consolidated market to at least start asking questions.
Eamonn Dunphy recently wrote an article critisizing Denis O Brien's political interference.
I heard a classic on the radio this morning. The sunday business show on Today FM. Leo Varadkar mentioned Pat Kenny, then the host of the show said "My producer is telling me we cant mention Pat Kenny" ???
Pat Kenny is watching you :eek:!

nesf

eamonnm79 wrote: »

You are excusing the Dept of finance from their obligation to tell the truth (give as accurite reporting as they can) to the citizens.

But they are telling the truth, it's just nuanced and in technical language.

leninbenjamin

nesf wrote: »

Honestly, I don't think it's reasonable to expect your average person to wade into an ESRI report. The media's job in this is taking these reports and making them intelligible to the man on the street, not just to take the lazy approach and report the headline numbers.

you're right of course, given the state of current affairs. However at the same time, if people go and make financial decisions on the back of a media report they really have no one to blame but themselves.

this is really me going off topic i guess with me beliefs that the fundamentals of economics (and how to read the indicators) should be taught properly in schools and made mandatory for all. afterall, these things effect each and everyone of us in Western society.

eamonnm79

nesf wrote: »

But they are telling the truth, it's just nuanced and in technical language.

I hope you just forgot to add a smiley face there.

Why dont we dissagree over what our deffinition of 'is' is?

Using optimistic rather than as realistic as possible information is not "telling the truth"

nesf

eamonnm79 wrote: »

I hope you just forgot to add a smiley face there.

Why dont we dissagree over what our deffinition of 'is' is?

Using optimistic rather than as realistic as possible information is not "telling the truth"

It's a prediction. That's the problem. A prediction can be optimistic or pessimistic and still be genuine.

nesf

leninbenjamin wrote: »

you're right of course, given the state of current affairs. However at the same time, if people go and make financial decisions on the back of a media report they really have no one to blame but themselves.

Yeah to an extent I'd agree, but we do need to protect people from themselves to an extent. Just look at the genuine need for financial regulation in the sale of credit cards (we're pretty good on this front, the US on the other hand is a different scenario).

eamonnm79

nesf wrote: »

It's a prediction. That's the problem. A prediction can be optimistic or pessimistic and still be genuine.

I fundimentally disagree with your logic.
A prediction is only genuine if the person making the prediction is trying to be as realistic as possible with the information available.

nesf

eamonnm79 wrote: »

I fundimentally disagree with your logic.
A prediction is only genuine if the person making the prediction is trying to be as realistic as possible with the information available.

You make it sound as if there's a correct prediction and that's possible, nay, probable for someone to arrive at this if they're being genuine. I can assure you, this is not the case predictions will and can vary wildly because of the number of unknowns involved and the "uncharted waters" that the country is going through right now.

scipio

The bottom line is by understating inflation and consciously ignoring the asset bubbles they created, they kept interest rates too low for too long causing the debt bubble to get out of control. They didn't notice declining real incomes. GDP I understand is offset for inflaton as well, so growth appears artificially high leading to complacency on interest rates and the affordability of debt.

eamonnm79

nesf wrote: »

You make it sound as if there's a correct prediction and that's possible, nay, probable for someone to arrive at this if they're being genuine.

I am not trying to say that, and you know it.