Comments (18)

• Fephisto

  FULL ARTICLE link links to the wrong place.

  Published: May 27, 2008 8:37 AM

• Dennis

  "At this point I abandoned my quest to understand the official BLS number."

  It is a sad state of affairs when someone of the education and experience of Mr. Murphy can not fully understand or replicate the the seasonal adjustment used by the BLS to calculate the change in energy prices.
  

  Published: May 27, 2008 9:17 AM

• Fred K

  John Williams' website, at http://www.shadowstats.com may provide additional insight into the "gimmicked" government statistics.

  A few years ago, when it came to massaging data, a Russian I worked with said, "There are statisticians and then there are "Russian statisticians". I am sure he would agree that American government statisticians are now the world's premiere data engineers.

  Published: May 27, 2008 9:41 AM

• Steve

  The author says "in the middle columns I have colored a year gray if the period average starting at that year is lower than the 2008 value." Similarly, he says, "... in the final column, I have colored green the one year for which the (makeshift) seasonally adjusted figure is lower than a 4.6 percent drop."
  Where, if anywhere, is the version of his table that is colored as described?

  Published: May 27, 2008 9:45 AM

• Alex

  Enjoyed the article. I agree. Absolutely irresponsible reporting both by the BLS and the media.

  The idea of estimating a seasonally adjusted number for a variable is to extract the trend from normal seasonal variation, as Murphy says. So the BLS figure of an April downward trend for gasoline prices of 4.6% per month, which on an annualized basis is 72% per year, is beyond ludicrous.

  
  

  Published: May 27, 2008 10:04 AM

• David C

  Nice one Mr Murphy.

  as some wag said: 'torture the data for long enough, and they will eventually confess'

  Published: May 27, 2008 10:13 AM

• olmedo

  and the sad thing of all this is that you have to go trough years of graduated school to learn this crap and we, austrians, take graduated school "seriously"

  
  it is time to rebel folks!!!!

  go out and burn your degrees!!!

  
  we are austrains and we are proud we don't need the government indoctrinations of top economics, government, schools!!!!

  olmedo

  Published: May 27, 2008 10:19 AM

• fundamentalist

  I think we need a ruling on what constitutes torture. Is this the equivalent of waterboarding the data?

  Published: May 27, 2008 12:23 PM

• N. Joseph Potts

  There's a lot of "data" around that resembles the inflation stats. Among the big current ones that come to mind are those conveying predictions of global warming.

  But even those pale compared with the projections involving what government can make people do (or stop doing), to what (great) effect, and at what (minimal) cost.

  This is all coming to us from the same folks (or the same folks' money), with or without the participation of the Bush administration.

  Published: May 27, 2008 12:34 PM

• Cliff

  I have a question about the seasonal adjustments. If they are adjusted down 5% for April wouldn't they at some point have to be adjusted back up at the end of the seasonal period, negating whatever good it did to adjust them in the first place? Or do they skip that part of it?

  Published: May 27, 2008 12:53 PM

• Jim Fedako

  Follow the link to the BLS model and website. Note the number of advanced-degreed mathematicians being employed to obfuscate fact. Keep that in mind the next time you hear that there is a shortage of mathematicians.

  Government misallocates resources, always.

  Published: May 27, 2008 1:20 PM

• Jeremy Wuitschick

  Given the manner in which the data is presented to public, it should be no wonder that many people find economics to be confusing and boring.

  Most people are amazed at how simple things seem when I explain economic problems using the Austrian School. In fact the main problem I have in these conversations is that my explanations seem TOO SIMPLE. Many times people believe that my explanation can not be correct because I make use of only the law of supply and demand (and perhaps a few other simple ideas) to explain rising prices. To these poor folks that have been misled by years of Keynesian scams, economics can only be modeled with complex mathematics and incomprehensible graphs.

  Does anyone else have this problem when explaining economics to people not familiar with the Austrian School?

  (The other major problem I run into is when I explain to people at work why I believe that we should do away with public schools.... perhaps thats because I work at a public school....hehehehe)

  Published: May 27, 2008 5:19 PM

• olmedo

  jeremy,

  but that is the whole point, to make the simple seem confusing otherwise people will discover how they are getting cheated.

  it is no wonder why economics have evolved into such an arcane , complex and useless science (or pseudo science) through the years. economists, the same way as their predecessors the astrologers, are no more than apologist for government because it is the hand that feeds them.

  
  that i know, but what makes me sick is that even austrian institutions like the mises institute still gives so much importance to graduated degrees in economics from mainstream universities.

  it is time to create our own , totally independent, graduated programs and to hell what the mainstream has to say.

  and a truly austrian should aim at creating academics whose motto will be:

  
  "there is never such a thing as too much of a good theory¨ a good theory should always lead to a good practice.

  
  olmedo

  Published: May 27, 2008 5:53 PM

• LanceH

  Perhaps the BLS uses a weighted average of the past x years - weighted strongly in favor of the most recent years. That could explain why the figure of -4.6% is consistent with the data for the past 3 years -.as Murphy points out.

  I think the moral is not to use seasonally adjusted figures. When I download monetary aggregate stats from the Fed, I get the non-seasonally adjusted. If I want to do seasonal adjustment, I do it myself.

  Good article. Good detective work.
  

  Published: May 27, 2008 8:07 PM

• Bruce Koerber

  How absurd it is for all ears and all eyes to be poised, just waiting for the big event when the data is reported. Examples of this are many: the Fed decisions, the CPI, the unemployment rate, etc.

  The media has positioned itself as a middleman between the empiricists and the gullible public. Who is to blame for this continuation of economic heresy - the empiricists, the indentured media, the academics and persons of notoriety who swallowed socialism 'hook line and sinker?' All of the above but mostly the Keynesian politicians who corrupt the economy by their ego-driven interventionism.

  Published: May 27, 2008 8:11 PM

• Tim Swanson

  Speaking of ShadowStats, readers may be interested with the following interviews of John Williams' -- the guy behind it:

  http://money.cnn.com/video/#/video/news/2008/02/28/news.hunter.shadowstats.Feb28.cnnmoney

  http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2008/05/25/BU6K10JTEF.DTL

  Published: May 28, 2008 10:31 AM

• Person

  Coming soon!

  Government: "Well, gasoline's inflation rate has been accelerating, and last year its price doubled from March to April, so this year we were expecting it to triple from March to April, but it only went up 150%, so by our hyperadvanced model, gasoline fell in price by 50%, don't you feel rich?"

  Me: "Go to hell."

  Published: May 29, 2008 8:43 AM

• Maturin

  "There are three kinds of lies: lies, damned lies, and statistics."

  -attributed to Benjamin Disraeli and popularized in the United States by Mark Twain.

  Lies= Congress
  Damned lies= Paulson & Bernanke
  Statistics= BS... oops.... BLS

  Thanks, Bob, for another lucid analysis and explanation.

  Published: October 15, 2008 5:56 PM