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Dr. Paul Price
Dr. Paul Price

Don’t believe government announcements concerning unemployment data or inflation.

February 06, 2011

Our leaders seem to care only about getting reelected rather than addressing the dire needs of our nation. It takes about 150,000 newly created jobs to simply absorb the latest batch of first time entrants into the job market. The latest jobs data showed only 36,000 new positions yet claimed that the unemployment rate dropped from 9.4% to 9.0%. You don’t need an MIT degree to see this does not compute.

To obscure the truth, Washington D.C. has changed the rules on how they account for this rate. Presto, a big drop in unemployment even though more people entered the work force than the number of new jobs created. The chart below tells the true story. The percentage of America’s population that is actively employed has fallen to levels almost never seen. It’s worse now than it’s been in decades.


The official inflation rate numbers are similarly massaged to show low inflation even as everyday Americans see their living costs escalate dramatically. Pretending that inflation is low keeps debt service on our $14 trillion national obligation low. It also made for no raises in Social Security payments in either 2010 or 2011. Cost of living adjustments on pensions and other major government expenses are also keyed to the official inflation proclaimations. Political leaders have every incentive to undereport the real rate. ShadowStats shows the numbers in the chart below as they would have looked under the 1990 calculation rules. They’d look even more shocking if we were actually comparing apples to apples with the way inflation was figured in 1980’s when the reported rate was well into the 10% - 18% annualized range.


Dr. Paul Price

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Dr. Paul Price
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Josh Zachariah
Josh Zachariah - 5 years ago    Report SPAM

I dug this up from a blog of a PhD economist at UCSD who responded to the claims of underreported inflation:

"Shadowstats responds

Last month I called attention to an analysis by BLS researchers John Greenlees and Robert McClelland of some of the claims by John Williams of Shadowstats about the consequences for reported inflation of assorted technical decisions made by the BLS. Williams asked me to update with a link to his response to the BLS study. I am happy to do so, along with offering some further observations of my own.

You can follow the link to Shadowstats' response to Greenlees and McClelland and judge for yourself, but my impression is that the response is more philosophical than quantitative. In a separate phone conversation, Williams further clarified the Shadowstats methodology. Here's what John said to me:

I'm not going back and recalculating the CPI. All I'm doing is going back to the government's estimates of what the effect would be and using that as an ad factor to the reported statistics.

I had formed the mistaken impression that Williams was indeed trying to go back and recalculate measures such as the CPI based on a retrospective application of the historical BLS methodology. I found the specific quantitative results provided by Greenlees and McClelland to be convincing demonstrations that this could not be the case. I take further comfort in the understanding that Williams agrees that his numbers indeed do not represent the outcome of such a procedure."

for the actual link: _http://www.econbrowser.com/archives/2008/10/shadowstats_res.html

Josh Zachariah

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