I feel like it’s been a lifetime since I first wrote of how U.S. economic data is at best inaccurate, and at worst, flat out fiction. The genesis of this fraud dates back decades; specifically, when the CPI inflation index was “rejiggered” in the mid-1990s to include price suppressing techniques such as “substitution” and “hedonics.” It shouldn’t surprise anyone that nearly simultaneously, the dollar peaked in international purchasing power while the U.S. economy entered a death spiral that continues to this very day. The worse things get, the more the data is “doctored”; frankly, at a level of intensity equaled only by efforts to mask the dollar’s decline via PAPER gold and silver raids.
Irrespective of how many “jobs” the monthly NFP report purports to have been created, the real unemployment picture is objectively in its worst shape since the Great Depression. As measured by “underemployment” – which I characterize as those that cannot pay their bills – true unemployment is closer to 25% than the comical 7% published by the BLS, or Bureau of Labor Statistics. If it were not so, we wouldn’t have record Food Stamp and Disability participation; much less, declining real wages for four decades.
Sadly, all such data manipulations combined don’t compare to what we’ve seen in the past year; and now that sources of “economic data” are multiplying at the rate of High Frequency bids, it’s become nearly impossible to discern reality from noise. For example, the simple data point of “consumer confidence” alone is now published by six different providers; from the University of Michigan (which sells such data to high frequency traders just before publication), to Gallup, Bloomberg, the NFIB (National Federation of Independent Businesses), the “Business CEO Roundtable,” and the Conference Board. This economic “Tower of Babel” makes it nearly impossible to guess what’s really happening; which is why I focus more on real data such as durable goods orders, retail sales, construction spending, and home prices.
Even these reports are subject to “alterations”; not to mention, the economy-distorting impact of an exponentially growing government. However, they tend to be far more representative of reality; and in today’s “mirage” of an economy, while arbitrary “diffusion indices” like the PMI and ISM indices have fluctuated wildly; the aforementioned real data has been decidedly terrible. For example, the “evil troika of Washington, Wall Street, and the MSM can trumpet the “housing recovery” all they want. However, the reality that home sales, mortgage activity, and even home prices are in steep decline cannot be masked by bogus data. Per below, do you find it “coincidental” that home prices peaked when Fed “taper talk” commenced this Spring? I certainly don’t, as only record low rates enabled the real estate “dead count bounce” to occur in the first place.
And if the economy was so strongly “recovering,” why are most consumer confidence surveys pegged near multi-year lows; not to mention, Presidential and Congressional approval ratings? True, one can never fully trust such subjective data. However, one can sure as heck trust retail sales; which have been in such a freefall recently, the current holiday season (during which, retailers earn all their annual profits) is projecting to be the worst since the 2008-09 financial crisis.
Back to employment, there is quite obviously no data category more important to the establishment. Given today’s politicians have one, and only one, ultimate aim – re-election – limitless chicanery is utilized to make it appear “strong” and “increasing.” Frankly, the average person doesn’t care about anything other than the “headline number”; and thus, despite the ugly internals of such reports – depicting an ongoing, expanding deterioration – TPTB will do anything to report rising NFP payrolls.
As for measuring such data in the first place, the task is nearly impossible given the enormous population size; significant “off the books” economy; and statistically insignificant survey process utilized to gauge it. Private efforts to measure employment have failed miserably; as in the case of ADP – the nation’s largest payroll processor; which last year revised prior years’ data dramatically lower due to “flaws” in its calculation process. Even with its “new and improved” methodology, the variances in its estimates are comical; such as this month’s report, in which last month’s data was altered by 50%. And oh yeah, the correlation between private reports – like ADP; and public ones, like the BLS, have so sharply declined, it at times is amazing to believe they are reporting on the same topic.
Regarding the BLS, it for some time has utilized a dizzying blend of arbitrary, statistical “adjustments” to back into the top line number it desires in any given month. And by the way, some months the desired effect is actually a lower number; particularly when rates are rising and “taper talk” accelerating, as rising rates will destroy any remote chance of a real recovery. To wit, the BLS’ most tried-and-true “manipulation tool” is the monthly birth/death adjustment, which creates phantom jobs based on fictitious, unverifiable economic models. However, it has quite a few other tricks up its sleeve as well; particularly, “seasonal adjustments,” which it uses with impunity when needed. These “data games” can’t mask the new employment paradigm I wrote about earlier this year, but they can certainly create whatever “headline number” is desired.
As for the catalyst of this article, its tomorrow’s November NFP report; i.e., the last before the December 17th FOMC meeting. With interest rates already surging, pressure on the Fed to remain unwaveringly bullish is tremendous; as I wrote of yesterday, in “C’mon Bennie, I dare ya.” Bennie and Janet last month stated as much, but for some strange reason, the administration appears bent on convincing the masses the economy is finally “recovering”; even though, as noted above, essentially all real data says otherwise. Thus, I want to empower you with as much knowledge of what the NFP report really says as possible – to enable you to see past the noise of potentially violent market “reactions, upward or downward.
To start, I present “exhibit A”; i.e., last month’s damning whistleblower account of the October 2012 NFP report. You know, the one just before Obama’s re-election, depicting a plunging unemployment rate, to just below the level when he took office. Jack Welch, former CEO of GE, famously accused Obama of “cooking the books”; and now it appears he was right, based on this new information. This month, I don’t know what the BLS has in store; although frankly, I don’t give a darn. My goal is to acquire as many ounces as possible before the worldwide fiat Ponzi scheme ends; but in the meantime, I keenly await such reports to see just how desperate – and motivated – TPTB are to achieve their short-term goals.
For example, just how far will they take the “birth/death” model this month? And how, pray tell, does it always result in a positive adjustment? Last year alone, it added 617,000 phantom jobs; utilizing what should be a “zero-sum” model, but somehow, inexplicably adding three jobs for each one it subtracts! Better yet, the BLS now deletes year-ago data on a monthly basis; so as to not only make it impossible to reference, but understand how the inevitable “benchmark revisions” are calculated.
Moreover, this damning article describes how the BLS’s “seasonal adjustments” are no longer even internally consistent. Per the below chart, how can a specific week (in this case, the third in November) that has always been seasonally adjusted lower, suddenly be adjusted higher? This would be like assuming students no longer go back to school in September, or take vacations in December!
Last but not least, keep in mind that the so-called 6.5% unemployment rate “threshold” (that supposedly would catalyze QE “tapering”) could in actuality be reached without a single new job being created. Per this “unemployment calculator,” the plunging Labor Participation Rate is the primary cause of the falling BLS unemployment rate. And with 13 million Americans set to drop out of the Labor Force by December 28th – unless Congress extends unemployment benefits yet again; we may see 6.5% next month!
I’m writing this Wednesday, after the so-called “amazing” ADP employment report. Yet, gold is up $25/oz., and silver $0.60/oz., amidst surging interest rates and falling equities. Quite the turn of events, given the entire world is forecasting the end of Precious Metals; to be “replaced” by dollars, Bitcoins, and everything else. Frankly, with interest rates rocketing toward September’s multi-year highs, I wouldn’t be surprised at anything the BLS publishes Friday; as in my view, the government’s sole purpose is the justification of further QE, a dangerous high-wire act doomed to end tragically, likely sooner rather than later.
Regardless of the data, keep your “eyes on the prize”; albeit a pyrrhic prize at best, as when the reality of the U.S. economic collapse supersedes the propaganda, the resulting world will be dramatically less safe and comfortable. Remember, global physical gold and silver demand has never been higher, while physical supply has never been lower. And as always, due your own due diligence; but never forget that the end game is one of financial survival, not profit. When the entire world simultaneously realizes that only physical gold and silver are money, the opportunity to acquire them will already be gone – certainly at prices even remotely resembling the current levels.