maybe not but it is the biggest economy in the world when it tanks it will take the world with it...
Would governments manipulate economic data for political reasons? Well… YES, they always have… especially in the twilight of an asset mania, when hope and fear rule.
People want to believe inflated economic reporting -- at least until they (inevitably) lose confidence. When intentional currency inflation sets a moving standard, many other distortions also become conventional, popular, and believable. Seeing through them becomes an effort of will, because analyzing them is not easy. A few examples:
* The method for figuring the unemployment rate has been re-defined into a set of complex qualifications with an expiration date. Seeing the true unemployment rate should be simple… the data is relatively accurate and available. The goal seems to be to undercount the unemployed. * The Gross Domestic Product is inflated with exotic math. The “GDP deflator,” allows understatement of inflation in housing prices, food, utilities, medical costs, gasoline, and retail goods -- causing an overstating of GDP growth. * The “Hedonic Price Index,” (I do not get this – there’s nothing pleasurable about it) adjusts GDP substantially upward for “the value of increased computing capacity.” Software, which is temporary and short-lived, was changed from a business expense to a capital investment, and is now included in the GDP. Whoopee!
These dense manipulations (and others equally so) make the U.S. economy appear more robust than it actually is. Data is massaged, spun and revised -- intentionally and unconsciously -- into a statistical mirage that seems uniquely exaggerated in the U.S. This illusion makes comparisons to other economies difficult. International organizations such as the OECD have questioned our national accounting practices.
The soon-to-be loud topic of the December Elliott Wave Theorist is “The Silent Crash.” It provides an astounding view of today’s psychology-driven economic distortions, and gives a remarkable insight into the stealthy nature of bear markets. Bob Prechter’s perspective of current market and economic valuation shows the foolishness of measurements made with the elastic ruler of inflated dollars.
U. S. stock markets (as measured in dollars at least) are still inching higher in the face of debt, deficit, default, and decline of manufacturing growth. Investors are showing record confidence despite facing a largely opaque financial system. In the late stages of asset manias, value assessment is distorted but accepted as normal. Psychologically, we are still un-curious and contented -- easy marks.
Like a beehive calmed by a robbing beekeeper, our buzz is muted by a smoke screen. The buzz may turn angry when the smoke clears and we pull our collective faces out of the honey, and catch the scent of a bear.
(20min delay)