Posts filed under “Wages & Income”
First M3, now . . .
Sometimes, when the data is (how shall we say this) less than delightful, politicians pressure bureaucracies to modify their models. This attempt to misrepresent reality goes back at least to JFK, and probably much further. It is not party specific, but is a characteristic of the all too common creature, Politico Disinguousi.
Yesterday, we discussed the unprecedented seasonal changes to CPI (Pre-Revision CPI: 9%) that managed to all but eliminate inflation reporting. And the absurdity that is the birth death adjustment has all but completely bastardized the Non-Farm Payroll (NFP) data series. Of course, the cowardly scam that was the Boskin Commission was the most outrageous change in modeling over recent decades.
More brazen politicos don’t even bother gunking up the models — they simply press to stop reporting the data. The most egregious example of this in the recent past was M3 reporting. We noted as it happened that once the Fed decided to save a few pennies stopping M3 reporting, you knew that M3 was going to skyrocket.
And so it has.
The latest such attempt at reducing economic information is brought to our attention by the WSJ’s Real Time Economics. They note that:
"A statement from the chair of the NABE’s statistics committee, Haver Analytics President Maurine Haver, asserted that “just when reliable and timely indicators are needed most, resources devoted to their production at our federal statistical agencies have been cut, requiring the termination of data series or a reduction in sample sizes used to produce the data.”
Ms. Haver catalogs the casualties of budgetary tightening, writing that “the Bureau of Labor Statistics (BLS) has been forced to terminate all hours and earnings data reported for local areas as well as payroll employment for 65 small metro areas. The BLS International Price Program has also eliminated a number of series including prices of transportation services such as passenger air fares, air freight, and crude oil tanker freight. The Census Bureau will discontinue its Survey of Alterations and Repairs in May. The Bureau of Economic Analysis will reduce the level of industry detail in its county data and will eliminate the benchmark capital flow tables that provide baseline data on industry-by-industry investment by type of investment. This may only be the beginning.”
Let’s draw the appropriate conclusion from this: First M3 reporting stopped, and shortly thereafter, M3 skyrocketed. Next was the attempt to stop aggregating general economic information, and then we learned that GDP fell off the cliff.
Now comes the attempt to reduce the reporting of hours and earnings data. Gee, can you guess what coincidence is about to happen?
Let me end your suspense: Workers Get Fewer Hours, Deepening the Downturn.
"Throughout the country, businesses grappling with declining fortunes are cutting hours for those on their payrolls. Self-employed people are suffering a drop in demand for their services, like music lessons, catering and management consulting. Growing numbers of people are settling for part-time work out of a failure to secure a full-time position.
The gradual erosion of the paycheck has become a stealth force driving the American economic downturn. Most of the attention has focused on the loss of jobs and the risk of layoffs. But the less-noticeable shrinking of hours and pay for millions of workers around the country appears to be a bigger contributor to the decline, which has already spread from housing and finance to other important areas of the economy.
While official unemployment has risen only modestly, to 5.1 percent, the reduction of wages and working hours for those still employed has become a primary cause of distress, pushing many more Americans into a downward spiral, economists say.
Moreover, this slippage is a critical indicator that the nation may well be on the verge of a recession, if not already in one.
Last month, the hours worked by those on American payrolls dropped, compared with six months earlier, according to an index maintained by the Labor Department. The last time the index moved into negative territory was February 2001, when the economy was on the doorstep of recession. A similar slide emerged in August 1990, one month into what proved an even more severe downturn."
Now what were the odds of that ?
Can M3 be Saved?
WTF? Feds Shutting Down Economic Data Site http://bigpicture.typepad.com/comments/2008/02/wtf-feds-shutti.html
A Slump in Economic Indicators
April 14, 2008, 12:02 pm
Workers Get Fewer Hours, Deepening the Downturn
PETER S. GOODMAN
NYT, April 18, 2008
Some key statistics as prediction aids: M3
Alternate Data Series
John William’s Shadow Stats