My Photo
Note: Jeff does not accept guest blog posts on A Dash of Insight.

For inquiries regarding advertising and republication, contact [email protected]

Follow Jeff on Twitter!

Enter your email address:

Delivered by FeedBurner


  • Seeking Alpha
    Seeking Alpha Certified
  • AllTopSites
    Alltop, all the top stories
  • iStockAnalyst
Talk Markets
Forexpros Contributor
Copyright 2005-2014
All Rights Reserved

« The Importance of "Being Right" | Main | How to Make Money on Barney Frank »

June 10, 2009



Experts can never be defeated.


Dave - -Why don't you start by taking a look at this:

You need to follow the links in the article. James Hamilton is a top economist and not a market bull by any means. He is just trying to get it right. The key point is that the supposed data cannot be replicated.

This is just the CPI stuff, but the employment arguments are similar IMHO.



Thanks, I'm slowly learning to give the benefit of the doubt to all but the most overtly hostile net-based communications.

More to the point though, I was wondering if you still discounted Shadowstats after reading their methodology/history/reasoning

The reason I bring this up is that IMO the scenario they put forth is very plausible.


Dave - -This is not a problem for me at all. There have been a few "lost" comments and people send me an email. We fix ASAP.

I hope to write more on the issues you raise.

Thanks for your comments and the courteous follow up messages!



Hi Jeff,

Much needed apologies if I erroneously and unfairly accused you of
improper comment deletion, and thanks for the cordial response.

I am curious though, if you have read the methodology/history behind
Shadowstats.  IMO, their
arguments are well reasoned and compelling.

Interestingly, they do not attribute any nefarious intent to the
government, just logical behavior by bureaucrats under pressure from
their superiors.  I suspect that something similar happened in the
former Soviet Union.

I could be wrong.

Best regards,



Hi Jeff,

This just in, and conveniently directly bears on the discussion (as
it's a blogger pointing out problems with the way the gov't creates
it's stats):

It also includes the information I had originally posted re: 
Unemployment stats.

Best regards,



Dave - we do not delete posts that disagree. We welcome any discussion that is germane and within the bounds of decency.

Occasionally TypePad thinks that something is spam and filters it, but I cannot find anything from you there.

As you can tell from the article, I disagree about shadowstats, but it is fine for people to disagree.

Thanks for calling this to our attention.




You didn't like my post indicating the unemployment projections based on stimulus/no stimulus that were released by the government were at best, wildly optimistic. Because it's been deleted.

Ever poke around ?

Believe none of what you hear and half of what you see.


Weekly Market Analysis From Charts and Coffee Blog is up -

Tom Cole

Hi Jeff,

I can agree with most of your post, but there is one area of the BLS data that at least in my mind is quite culpable in creating the Mess We Are In. It is "equivalent rents". If the BLS had used any reasonable measure of housing costs, the effect of the housing bubble would have impacted the CPI in a meaningful way and most likely Greenspan would have raised interest rates much earlier possibly deflating the bubble in time. A lot of guesswork and assumptions in the previous statement, for sure. And there are many causes to the Mess We Are In, I know. But consider that by using "equivalent rents" the housing bubble had the perverse effect of lowering the government's definition of inflation. This was due to the pricing pressures that landlords were under due to the easy money available to anyone breathing, or having recently breathed. "Equivalent rents" is a proxy. the relationship between rents and house prices is quite elastic. yet this elastic relationship was part of a supposedly tight feedback loop of Fed rate policy and its observed effect on inflation.


Harry -- I agree that it would not be exciting. I suppose that means it would not work. As I wrote earlier this week, it is all about the ratings.

Barry Ritholtz would not be the ideal candidate for this debate, since he does not believe in the conspiracy theories. I think he has made this clear on several occasions.

He disagrees with many of the BLS methods and conclusions, but his points are based on actual issues.

Thanks for some good points on data presentation.



Steve - You have laid out nicely what most people think, and perhaps also an acceptable theory about why agencies grow.

But institutions do not have motives, the people do. There is a distinction between the relatively small number of political appointees and career professionals who watch Presidents come and go.

So let us think about how this would work at the BLS. The conspiracy types believe that these regular workers cook the books and later make revisions, etc. This would be a conspiracy involving scores of people. How do they get their orders? Why do they all keep secret? Did they all just switch from doing this for Bush to doing it for Obama?

These are realistic and practical questions. The conspiracy folks make it seem like every administration comes in and has complete control over data releases. The reality is that most of government functions do not change with elections, and the workers have differing party affiliations.

I invite you to elaborate a bit more on your idea. How is a tenured career economist at the BLS or the Census Bureau affected by these political influences and motives? They cannot be fired, and their pay is not determined by the political types.

Thanks for commenting and initiating a thread that I hope others will consider.


Mark Hines

I like it.
Keep up the good work.
Mark Hines


"Peer review" usually refers to PHD holders from tax funded education institutions. To say they don't have an ax to grind after working most of their lives in these organizations is false.

"The first source consists of career professionals whose salary and benefits have no relationship to politics. They develop methods and write articles for peer-reviewed journals. Their career chances depend upon professional performance as evaluated by others in the field."

If they are from academia and the civil service, their success depends a lot on politics, who they know and who they have helped.

Politics dominates discourse and policy in tax funded institutions whether the military, academia, the courts, the civil service.

And in these institutions they all are motivated always by 1) how to acquire more power and 2) how to get a bigger budget.


David - I am curious about what government statistics -- not forecasts, but statistics -- you think are the result of political pressure.

You frequently use your personal experience to inform your excellent articles. You are probably most confident when a topic hits the sweet spot of your experience.

Personally, I have worked in a government research operation and taught mid-career government professionals in a graduate program. I have former colleagues who have entered the public service. This experience helps me to identify issues and sources where politics is involved. From the perspective of my experience, the idea that routine data releases are manipulated for political effect is not only mistaken, it is silly.

Here is a small suggestion. The BLS is not so far from you. Have a visit for an hour or two. They would be happy to talk with you. Then see if your opinion is the same.

Thanks for your comment and support for the "debate" idea.



While I agree that the creators of these monthly government reports are upstanding citizens and I also agree that it is inordinately hard to explain all the statistical caveats and assumptions that underlie the statistics in these reports. However, I think this also misses the point of the manner in which these reports are disseminated. That is, the reports are highlighted by business news pundits or octobox talking heads who talk their book.

So if you look at today's Retail Sales numbers the CNBC pundits will focus on the 0.5% growth but not review further why that number is much higher than the the previous month.

One quick look through the summary statistics that when aggregated generate the headline number will show that the majority of the growth is from Gasoline stations, meaning oil prices are the reason for the jump in retail spending. This probably mitigates any upside benefit that the headline number implies.

If you did bring in a Census bureaucrat, s/he would explain in a long-winded fashion an explanation that implies a lot of the uncertainties these that these numbers necessarily contain, including a warning similar to the paragraph above.

If you pitted that person versus a blogger like Barry Ritholtz I think you would have a fairly collegial interview that would not make for great television. Thus, most people are stuck with CNBC and its better television, while a few people actually read the figures and (hopefully) make money in the long run.


Before one can say that they don't believe in something they should know what it is they are questioning - the methodology, sampling error, assumptions, limitations of the approach, leading/lagging bias as pertaining to the economic cycle, etc.

Sure, there may be lots of reason for scepticism but more often than not it will be because of 1) methodology issues or 2) misunderstanding of what the data actually captures rather than the data itself.

For example, inflation data could be misleading if the basket being measured leaves out certain asset prices or is adjusted in some way that distorts the popular notion of inflation. The devil always lies in the details.

Lastly, I want to thank you for your posts on understanding some of the economic data and in general keeping things sober.

PS -- aside from the weird Google Accounts jive -- I am David Merkel and I am not trying to hide it.

Dr. Jeff, some bloggers are experts -- the categories are not mutually exclusive. Also, the American way is to not give the benefit of the doubt to the government. The bureaucrats have their own pressures that they face from politicians and business interests.

But I am a reasonable guy, and I say, let the debate begin. Let a highly trained defender of government statistics debate a detractor. I would find that fun, and my opinion is malleable in this matter, so maybe my opinion would change, which is middling; I trust some government statistics and not others. It depends on the level of political pressure involved.

Paul in Kansas City

jeff this article is an example of why i love your site. i like to believe i am better thinker because of it.

The comments to this entry are closed.