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The Economy Is Rotten and so Is the Official Data

By July 28, 2023Commentary

It is unfortunate when government economic statistics can’t be trusted, but they currently can’t.  Whether it is inability to get good source data, as may partly be the issue with employment reports, or using questionable methodological choices to shade the data to a desired outcome, as is the case with employment and inflation data, it is unlikely that government data gives an accurate picture.  So you have to look at the data provided with a jaundiced eye and you have to look for sources that can give you a different perspective.  So here is a report from an investment firm that does a good job of describing some issues with the recent data releases.  In particular you will note the discussion about the federal fiscal situation.  Revenues are falling short, spending is higher than projected, interest costs on the federal debt are growing rapidly.  There appears to be little will to even acknowledge the dire nature of the situation, much less rectify it.     (HIM Report)

From a more technical perspective, money is the lifeblood of the economy and how much money, broadly defined, is in circulation and how fast it circulates, has a lot to do with total economic activity.  After a massive increase in the money supply during the epidemic, we now are experiencing much slower growth or even a reduction in supply.  Interest rates are higher, which slows transfers of money for business investment and consumer spending.  As the paper notes, it is highly likely that the economy is in much worse shape than the official statistics suggest and the next few years are going to be difficult.

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