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Modern investing offers the promise that investors who "do their homework" and use data more intelligently than the herd can gain a valuable edge. But what if the underlying data available to the investing public is fundamentally flawed?
The federal government agencies that issue headline data and the mainstream media that reprints the data without skeptical analysis would have us believe that these indicators -- the unemployment rate and the consumer price index (CPI), for example -- accurately reflect economic realities.
The other indicator that is implicitly or explicitly assumed to reflect the economy’s health is, of course, the stock market, generally represented by the S&P 500 index.
That the government indicators and the stock market are both suspect is now a given.
The chart below, one of many possible examples, proves this suspicion is well-founded. This is a chart of a broad measure of employment in the U.S. published by the U.S. Department of Labor, Bureau of Labor Statistics (BLS). As we can see, when 140 million people had jobs in 2009, the official unemployment rate was 7.3%.
Yet when 140 million people had jobs in early 2012, the unemployment rate was 8.3%. How can the rate change when the number of jobs remain constant? The reason is that the unemployment rate is based not just on the number of jobs but on the number of people who are ready, willing and able to work—the labor force. The unemployment rate is based on the labor force minus the number of employed equals the number of people counted as unemployed. The government games the unemployment rate by keeping the labor force number artificially low. Despite the working-age population rising by 9.4 million people since 2008, the official labor force has been 154 million since 2008. Where did the government put all those millions new workers? In the “not in the labor force” category, which rose by roughly 8 million since early 2009. In other words, dropping millions of people from the labor force artificially lowers the unemployment rate.
From Chris Martenson's Free Newsletter
9 comments:
Although it is beyong any shadow of a doubt that the .gov manipulates the inflation & unemployment figures, anybody who says that PM prices are manipulated is just wearing a tin-foil hat.
I am manipulating PM prices and I have you all under my control hahaha. Suffer ye slaves as the Queen owns it all. Follow the yellow brick road to OZ and don't listen to that man behind the curtain when you get there.
All those people wearing tin foil hats just drive up the price of aluminum. Another plot of mine. As you can see I am bored today. 86F and climbing. I'm melting, I'm melting.
Those purple mushrooms that grow in Florida must be in season right now. LOL.
Ah those were the days of magic mushrooms. Made me sick every time so I was not into it much.
Mushrooms make me yawn. A lot. Still do (they sell them in Amsterdam.) I'm looking forward to yawning my way around Rome next month. Yawning in Venice last fall was fun. Wow, the rocking motion on the vaporetto, man...
Hey Bukko with the mushrooms you don't have to go anywhere to be on a trip. I just couldn't stomach them. I would be uneasy trying anything like that again. I won't even smoke any weed. We skipped the shrink visit today. No need IMHO. Just pumping more drugs into Yvonne. The psychologist is great and she likes him. The conversion of the bathroom took too long and was too expensive, but what is done is done. Everything is now more handicap friendly. Even for me.
Hi all. Hope everyone is well.
They sell mushrooms (so I am told) in Vancouver at the local bong shoppe. Where you can also buy material to fill your bong.
Allegedly illegal, but no one seems to care. You go to a door at the back of the store with a mailslot, they have a (rather extensive) menu posted on the wall. Pick your flavors.
My friend in Van says there are 3 places within 2 blocks of his apartment.
"investors who "do their homework" and use data more intelligently than the herd can gain a valuable edge."
If you are trading the markets based on the unemployment statistics, your edge is dull.
You could do a day trade on the day the stats are released, based on the hope the market will notice and react to the statistic.
But other than tha, I would say that is a bad example.
A real trader cares not what the news is, on a statistic, or any other topic.
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