Super important conspiracy

[Steven Gaal]

LOL! Of the 29 posts made in this "important" thread, 28 of them were made by the opening poster. Self inflation of the ego is not a virtue, Steven.

POSTS are for educational purposes. The issue of the poor is not a LOL matter IMHO.

unsympathetic to poor ?? +++++++++++++ uneducable

English Adjective uneducable (comparative more uneducable, superlative most uneducable)

1. Incapable of being educated.

Synonyms

• unteachable

[Steven Gaal]

Homeless In Fema Camps, Relocation Centers

June 20th, 2014

http://investmentwatchblog.com/homeless-in-fema-camps-relocation-centers/

Read more at http://investmentwatchblog.com/homeless-in-fema-camps-relocation-centers/#wwXeCR1gSHduWmFh.99

[Steven Gaal]

Detroit activists call for UN help as city shuts off water for thousands

http://www.newsforage.com/2014/06/detroit-activists-call-for-un-help-as.html

[Steven Gaal]

People Are Waking Up As Economy In Free-Fall? Congress Approval Rating Sinks To Historic Low, American Trust In Media Falls To Decade Low, CNBC Viewership Drops To Lowest Since 1997!

June 24th, 2014

==============

http://investmentwatchblog.com/people-are-waking-up-as-economy-in-free-fall-congress-approval-rating-sinks-to-historic-low-cnbc-viewership-drops-to-lowest-since-1997-cramer-has-worst-month-ever/

Edited June 25, 2014 by Steven Gaal

[Steven Gaal]

Virtual Economy’s Phantom Job Gains Are Based on Statistical Fraud. And More Fraud Is in the Works

By Dr. Paul Craig Roberts 7/8/14

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Washington can’t stop lying. Don’t be convinced by last Thursday’s job report that it is your fault if you don’t have a job. Those 288,000 jobs and 6.1% unemployment rate are more fiction than reality.

In his analysis of the June Labor Data from the Bureau of Labor Statistics, John Williams (www.ShadowStats.com) wrote that the 288,000 June jobs and 6.1% unemployment rate are “far removed from common experience and underlying reality.” Payrolls were overstated by “massive, hidden shifts in seasonal adjustments,” and the Birth-Death model added the usual phantom jobs.

Williams reports that “the seasonal factors are changed each and every month as part of the concurrent seasonal-adjustment process, which is tantamount to a fraud,” as the changes in the seasonal factors can inflate the jobs number. While the headline numbers always are on a new basis, the prior reporting is not revised so as to be consistent.

The monthly unemployment rates are not comparable, so one doesn’t know whether the official U.3 rate (the headline rate that the financial press reports) went up or down. Moreover, the rate does not count discouraged workers who, unable to find a job, cease looking. To be counted among the U.3 unemployed, the person must have actively looked for work during the four weeks prior to the survey. The U.3 rate automatically declines as people who have been unable to find jobs cease trying to find one and thereby cease to be counted as unemployed.

There is a second official measure of unemployment that includes people who have been discouraged for less than one year. That rate, known as U.6, is seldom reported and is double the 6.1% rate.

Since 1994 there has been no official measure than includes discouraged people who have not looked for a job for more than a year. Including all discouraged workers produces an unemployment rate that currently stands at 23.1%, almost four times the rate that the financial press reports.

What you can take away from this is the opposite of what the presstitute media would have you believe. The measured rate of unemployment can decline simply because large numbers of the unemployed become discouraged workers, cease looking for work, and cease to be counted in the U.3 and U.6 measures of the unemployment rate.

The decline in the employment-population ratio from 63% prior to the 2008 downturn to 59% today reflects the growth in discouraged workers. Indeed, the ratio has not recovered its previous level during the alleged recovery, an indication that the recovery is an illusion created by the understated measure of inflation that is used to deflate nominal GDP growth.

Another indication that there has been no recovery is that Sentier Research’s index of real median household income continued to decline for two years after the alleged recovery began in June 2009. There has been a slight upturn in real median household income since June 2011, but income remains far below the pre-recession level.

The Birth-Death model adds an average of 62,000 jobs to the reported payroll jobs numbers each month. This arbitrary boost to the payroll jobs numbers is in addition to the Bureau of Labor Statistics’ underlying assumption that unreported jobs lost to business failures are matched by unreported new jobs from new business startups, an assumption that does not well fit an economy that fell into recession and is unable to recover.

John Williams concludes that in current BLS reporting, “the aggregate average overstatement of employment change easily exceeds 200,000 jobs per month.”

In other words, the economy did not gain 288,000 new jobs last month. But let’s assume the economy did gain 288,000 jobs and exam where the claimed jobs are reported to be.

Of the alleged 288,000 new jobs, 16,000, or 5.5 percent are in manufacturing, which is not very promising for engineers and blue collar workers. Growth in goods producing jobs has almost disappeared from the US economy. As explained below, to alter this problem the government is going to change definitions in order to artificially inflate manufacturing jobs.

In June private services account for 82 percent of the supposed new jobs. The jobs are found mainly in non-tradable domestic services that pay little and cannot be exported to help to close the large US trade deficit.

Wholesale and retail trade account for 55,300 jobs. Do you believe sales are this strong when retailers are closing stores and when shopping malls are closing?

Insurance (most likely the paperwork of Obamacare) contributed 8,500 jobs.

As so few can purchase homes, “real estate rental and leasing” contributed 8,500 jobs.

Professional and business services contributed 67,000 jobs, but 57% of these jobs were in employment services, temporary help services, and services to buildings and dwellings.

That old standby, education and health services, accounted for 33,700 jobs consisting mainly of ambulatory health care services jobs and social assistance jobs of which three-quarters are in child day care services.

The other old standby, waitresses and bartenders, gave us 32,800 jobs, and amusements, gambling, and recreation gave us 3,500 jobs.

Local government, principally education, gave us 22,000 jobs.

So, where are the jobs for university graduates? They are practically non-existent. Think of all the MBAs, but June had only 2,300 jobs for management of companies and enterprises.

Think of the struggle to get into law and medical schools. There’s no job payoff. June had jobs for 1,200 in legal services, which includes receptionists and para-legals. Where are all the law school graduates finding jobs?

Offices of physicians (mainly people who fill out the mandated paperwork and comply with all the regulations, which have multiplied under ObamaCare) hired 4,000 people. Outpatient care centers hired 700 people. Nursing care facilities hired 2,400 people. So where are the jobs for the medical school graduates?

Aside from all the exaggerations in the jobs numbers of which ShadowStats.com has informed us, just taking the jobs as reported, what kind of economy do these jobs indicate: a superpower whose pretensions are to exercise hegemony over the world or an economy in which opportunities are disappearing and incomes are falling?

Do you think that this jobs picture would be the same if the government in Washington cared about you instead of the mega-rich?

Some interesting numbers can be calculated from table A.9 in the BLS press release. John Williams advises that the BLS is inconsistent in the methods it uses to tabulate the data in table A.9 and that the data is also afflicted by seasonal adjustment problems. However, as the unemployment rate and payroll jobs are reported regardless of their problems, we can also report the BLS finding that in June 523,000 full-time jobs disappeared and 800,000 part time jobs appeared.

Here, perhaps, we have yet another downside of the misnamed Obama “Affordable Care Act.” Employers are terminating full-time employment and replacing the jobs with part-time employment in order to come in under the 50-person full time employment that makes employers responsible for fringe benefits such as health care.

Americans are already experiencing difficulties making ends meet, despite the alleged “recovery.” If yet another half million Americans have been forced onto part-time pay with consequent loss of health care and other benefits, consumer demand is further compressed, with the consequence, unless hidden by statistical trickery, of a 2nd quarter negative GDP and thus officially the reappearance of recession.

What will the government do if a recession cannot be hidden? If years of unprecedented money printing and Keynesian fiscal deficits have not brought recovery, what will bring recovery? How far down will US living standards fall for the 99% in order that the 1% can become ever more mega-rich while Washington wastes our diminishing substance exercising hegemony over the world?

Just as Washington lied to you about Saddam Hussein’s weapons of mass destruction,

Assad’s use of chemical weapons, Russian invasion of Ukraine, Waco, and any number of false flag or nonexistent attacks such as Tonkin Gulf, Washington lies to you about jobs and economic recovery. Don’t believe the spin that you are unemployed because you are shiftless and prefer government handouts to work. The government does not want you to know that you are unemployed because the corporations offshored American jobs to foreigners and because economic policy only serves the oversized banks and the one percent.

Just as the jobs and inflation numbers are rigged and the financial markets are rigged, the corrupt Obama regime is now planning to rig US manufacturing and trade statistics in order to bury all evidence of offshoring’s adverse impact on our economy.

The federal governments Economic Classification Policy Committee has come up with a proposal to redefine fact as fantasy in order to hide offshoring’s contribution to the US trade deficit, artificially inflate the number of US manufacturing jobs, and redefine foreign-made manufactured products as US manufactured products. For example, Apple iPhones made in China and sold in Europe would be reported as a US export of manufactured goods. Read Ben Beachy’s important report on this blatant statistical fraud in CounterPunch’s July 4th weekend edition: http://www.counterpunch.org/2014/07/04/we-didnt-offshore-manufacturing/

China will not agree that the Apple brand name means that the phones are not Chinese production. If the Obama regime succeeds with this fraud, the iPhones would be counted twice, once by China and once by the US, and the double-counting would exaggerate world GDP.

For years I have exposed the absurd claim that offshoring is merely the operation of free trade, and I have exposed the incompetent studies by such as Michael Porter at Harvard and Matthew Slaughter at Dartmouth that claimed to prove that the US was benefitting from offshoring its manufacturing. My book published in 2012 in Germany and in 2013 in the US, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, proves that offshoring has dismantled the ladders of upward mobility that made the US an opportunity society and is responsible for the decline in US economic growth. The lost jobs and decline in the middle class has contributed to the rise in income inequality, the destruction of tax base for cities and states, and loss of population in America’s once great manufacturing centers.

For the most part economists have turned a blind eye. Economists serve the globalists. It pays them well.

The corruption in present-day America is total. Psychologists and anthropologists serve war and torture. Economists serve globalism and US financial hegemony. Physicists and chemists serve the war industries. Physicists and computer geeks serve NSA.

The media serves the government and the corporations. The political parties serve the six powerful private interest groups that rule the country.

No one serves truth and liberty.

I predict that within ten years truth and liberty will be forbidden words uttered only by “domestic extremists” who are a threat that must be exterminated without due process of law.

America has left us. We now have the tyranny of the Orwellian state that rules, not by the ballot box and Constitution, but by force and propaganda.

Edited July 8, 2014 by Steven Gaal

[Steven Gaal]

The Central Banker/U.S. Government Recovery Illusion Is Now Falling Apart

=-=-=-=-=-=

July 12th, 2014

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http://investmentwatchblog.com/the-central-bankeru-s-government-recovery-illusion-is-now-falling-apart/

Edited July 12, 2014 by Steven Gaal

[Steven Gaal]

Gallup Slams Lid On Hopes For US Economy

July 11th, 2014

==

Wolf Richter wolfstreet.com, www.amazon.com/author/wolfrichter

Consumers are “straining against rising prices on daily essentials to afford summer travel, dining out, and discretionary household purchases – the kinds of purchases that ordinarily keep an economy humming.” That’s what Gallup found when it used a new survey to dive deeper into consumer spending.

Its regular monthly survey has been mixed. The average dollar amount consumers spent in June swooned to $91 per day from $98 in May, after a crummy January-April period ranging from $78 to $88 per day. The May spurt seems to have been an outlier that had given rise to a lot of speculation consumers would finally hit “escape velocity,” now obviated by events. But from 2012 until late last year, the averages had been rising.

So Gallup dove deeper into the issue with its new survey conducted in mid-June to sort through what consumers are spending more or less money on. And what it found was that they’re buying a little more – “just not the things they want.”

They’re spending more on things they have to buy, and in many instances they’re spending more in these categories because prices have jumped. At the top of the list: groceries.

• Groceries: 59% spent more, 10% spent less.
• Gasoline: 58% spent more, 12% spent less
• Utilities: 45% spent more, 10% spent less
• Healthcare: 42% spent, 8% spent less
• Toilet paper and other household goods: 32% spent more, 5% spent less
• Rent, the biggie: 32% spent more, 9% spent less.

These categories are household essentials. They’re on top of the priority list. And in order to meet the requirements of these items, consumers are cutting back where they can. Gallup found that “the increasing cost of essential items is further constraining family budgets already hit hard by the Great Recession and still reeling from a stagnant economy.” Hence, the less essential the expense, the more it got cut. Here is the bottom of the list, which explains part of the recent retail woes:

• Retirement savings: 18% spent more, 17% spent less.
• Leisure activities: 28% spent more, 31% spent less
• Clothing: 25% spent more, 30% spent less
• Consumer electronics: 20% spent more, 31% spent less
• Travel: 26% spent more, 38% spent less
• Dining out: 26% spent more, 38% spent less

Then there are summer travel plans, so future spending. They show just how bifurcated the economy has become. On the positive side of the ledger, 69% of American plan to travel this summer, the highest since 2006, and far more than the 52% in 2009 during the depth of the Great Recession. And those travelers intend to spend more on transportation, food, lodging, and entertainment than last year, as Gallup put it, “further pressuring their already-strained budgets.”

But about one-third plan to spend only one night or less away from home. So not exactly a long vacation. And 36% are planning to travel less than last year, even worse than in the terrible year of 2010, when 33% were cutting back from the already terrible year 2009.

And what about “escape velocity” in consumer spending? Despite what Wall Street economists and other hype mongers have been predicting for five years in a row, Gallop soberly puts slams the lid on those speculations:

If there was any doubt that the U.S. economy is still struggling to get back on its feet, the results of this poll reinforce that reality. Because consumer spending is the lifeblood of a healthy economy, these findings suggest that discretionary spending still has a ways to go before it will fuel the kind of

economic growth

Americans have been hoping for.

Americans who are struggling to make ends meet, and who cut discretionary spending in order to pay for essentials, form a large part of the middle class. But there are others who don’t have these problems, who are doing well. A dichotomy that shows up in “dining out.”

“Dining out” made the bottom of the list: 38% of the people cut back, while only 26% spent more on it. The restaurant industry should be groaning in pain.

But someone must be eating out. The Restaurant Performance Index (RPI) for May,released on June 30, rose again, “driven by stronger sales and traffic levels and an increasingly optimistic outlook among restaurant operators.” May was the third month in a row that the Current Situation Index was above 100, and therefore in expansion mode.

Smell of conundrum? Nope. But a sign of America’s dual-track society. The 26% of consumer who spent more on dining out might well belong to that group whose median household income exceeds $50k a year. They feel flush and their confidence has soared to post-recession highs. But the confidence of consumers making less than $50k a year has barely moved up from the recession bottom. And the gap between the two is at a record high. Read…. This Chart Truly Depicts What’s Wrong With the ‘Recovery’ in America

Read more at http://investmentwatchblog.com/gallup-slams-lid-on-hopes-for-us-economy/#xpx7pvVmxx23yiCF.99

Edited July 14, 2014 by Steven Gaal

[John Dolva]

Virtual Economy’s Phantom Job Gains Are Based on Statistical Fraud. And More Fraud Is in the Works

While it's great someone is attempting to expose the chronic deceit of capitalist modus (article well worth reading for the statistical analysis ) the mistake this author makes is a common one : to shift the blame for an inherent flaw in capitalism onto a method of capitalism. He speaks of laissé faire capitalism as if capitalism somehow can be modified to other forms and so solve problems. In this case he makes a point of blaming 'offshoring'.

Outsourcing and offshoring are techniques of economic rationalism but to point at them as a way to help the producers of wealth, the working class of the world, this scenario works in the interest of capital ( "corruption ... is total" ) by implying that some sort of protectionism of us industry and a separation from the industry of other nations, where the working class of the us has its sisters and brothers, not enemies. The enemy of the us worker, just as the enemy of workers in any other country, is capitalism.

One can read this op piece as a precursor to the situation where workers of the world fight each other on behalf of their common enemy.

The real solution : workers of the world : Unite.

[Steven Gaal]

\ the burger dosent lie/ Gaal

McDonald’s franchisees most pessimistic in a decade

Katie Little

5 Hours AgoCNBC.com

====

McDonald's franchisees' sales outlook for the next six months is the darkest it's been in more than a decade, according to a new Janney Capital Markets report.

Following the report, McDonald's shares fell 1.5 percent in trade on Wednesday.

Source: McDonald's | Facebook

When asked to rate their forecast from 1 (poor) to 5 (excellent), franchisees surveyed reported an average of 1.84. This marks the lowest level since the firm began polling franchisees in 2003.

Read MoreMcDonald's answers'Why doesn't your food rot?'

"It is striking to hear the franchisees so concerned about the direction of the business," said Mark Kalinowski, restaurant analyst at Janney, in a phone interview. "I think that gets to a lot of challenges that McDonald's is facing."

Spotting the next Chipotle: Restaurants to watch

Source: Project Pie

Franchisees cited a range of issues including a complex menu, the economy and marketing missteps. On the company's last earnings call, McDonald's CEO Don Thompson admitted the chain had been "chasing a few too many limited-time offers" and said the company is working to make sure it's not "implementing too many products."

Despite hopes that the U.S. consumer would show signs of being on a "better footing" by now, Kalinowski said the fast food giant's still operating in a challenged environment.

Based on the survey's results, Janney lowered its U.S. same-store sales forecast to a 2.6 percent drop for June and a 1.8 percent decrease for July.

It's also dropped its full value estimate for McDonald's to $96 from $98.

===

—By CNBC's

Edited July 16, 2014 by Steven Gaal

[Steven Gaal]

AlterNet / By Lynn Stuart Parramore

Millennials Aren't Cheap, They're Broke

Pundits lament that young people are not buying cars and houses.

Photo Credit: Shutterstock.com

Stay up to date with the latest headlines via email

Millennials, that perennial favorite topic of pundits, are back in the news. This time they’ve been dubbed the “Cheapest Generation” in a recent piece in the Atlantic Monthly.

Fair assessment? Or fairly out to lunch?

“Millennials,” announce the authors, “have turned against both cars and houses in dramatic and historic fashion.” Among the many reasons given for this curious circumstance are new mobile technologies “enabling a different kind of consumption” and patterns of re-urbanization.

The authors do allow that “the Great Recession is responsible for some of the decline” in purchasing. But they worry that young folks just don’t seem to want to spend as lavishly as their parents did, which is a problem because since the end of World War II, new cars and houses have powered the American economy. “Millennials may have lost interest in both,” they warn. They’re more interested in their smartphones than a new ride or a phat pad.

Here’s another thought: they’re broke. Granted, that’s not as sexy for magazine writers to talk about as sussing out cultural and demographic trends. But it’s awfully hard to buy a house or a car when any of the following apply:

• You are in student debt up to your eyeballs.
• You can’t find a job.
• When you do find a job, that job is insecure, low-wage, with few to no benefits.

A company called Revolution, which examines consumer behavior, came out with a report October 13 that the authors of the Atlantic Monthly piece might have consulted before labeling millennials cheap:

“[The report] revealed key motivations behind why millennials are buying fewer cars. And, contrary to many of the reasons cited in hundreds of articles and reports, the bottom line is clear —they don’t have enough money to buy vehicles due to the continuing weak economy.”

Eureka!

The Great Recession amplified the unemployment and poor jobs and crap wages, but the tale began around the time millennials were born in the 1980s, when Reagan convinced much of America that laissez faire capitalism was the ticket to good times. That was true for a tiny portion of the country, which may now be observed buying McMansions and yachts. But pretty much everyone else, from the middle class on down, got screwed, and the screws are tightening every day.

Millennials have never seen a world in which union-bashing, outsourcing, shareholder value ideology, crap temp jobs, stagnant wages, and growing inequality were not the norm. Most millennials did not go to college, and if they have a high school diploma, it’s worth less than it was than for any generation that came before. Many of the college-educated started out getting exploited as unpaid interns, then didn’t get the jobs they were promised, and subsequently found themselves struggling for one gig after another with plummeting hopes of forging a meaningful career.

Yet pundits are constantly exploring the choices these young people are making as if there is some great mystery to be divined. They aren’t getting married! They’re still living at home with their parents! It must be because they are lazy, or immature, or indecisive, or turning away from consumption for ideological reasons.

No, they just don’t have any money. And money is what you need to do stuff like get married and set up your own household and buy expensive items.

True, you may lose some interest in things you can’t afford to buy and redirect your attention and efforts to stuff that is more attainable. So you think about sharing an apartment instead of a buying a house, or sharing a Zipcar instead of buying your own snazzy new automobile. But these decisions may have a lot more to do with the fact that you just can’t afford what your parents had at your age than some grand urge to live with a small footprint or not to be a spendthrift.

To be young is to be selfish and want things for yourself. It’s hard to imagine that the majority of young people are saying, “No, I don’t think I’ll opt for my own apartment, but rather deal with noisy roommates because really I’m just kind of cheap/environmentally conscious/more interested in downloading apps on my smartphone.” They may be looking for things besides cars and houses to make them happy, and maybe that’s not a bad development in many ways, but it probably isn’t because they are so fundamentally different than generations past. They are simply trying to deal with the raw deal that has been handed to them as best they can. Some pundits describe this as a pragmatic response to the “new economy.” You might also call it trying to survive. Let’s examine what they’re up against.

• Millennials have the highest unemployment rate of any generation.
• They have more student loan debt than Gen Xers and Boomers did at their age.
• More millennials live in poverty than previous generations did at the same stage of life.
• They make up 61 percent of Americans making minimum wage.
• Having entered the workforce during an economic downturn, the effects on their future wages will likely be permanent, even if the economy bounces back.

Millennials need decent jobs. They need the power to bargain with employers. They need health insurance that does not suck. They need student debt forgiveness. They need investment in America’s infrastructure. Given that policy in America is currently dictated by the desires of the one percent, which has gotten control of much our political system, they probably aren’t going to get these things anytime soon.

But there are 80 million of them. That’s 25 percent of the U.S. population, and if they could organize themselves, they would be a powerful force to take on the forces that would deprive them of a decent future.

[Steven Gaal]

If “The Economy is Recovering” Why Is There a Surge in Homeless Children? (CLICK LINK)

For the last three elections now, 2010, 2012 and 2015, corporate media and corporate politicians have ceaselessly assured us that “the economy” whatever that is, is “back on track”, wherever that is.

Despite what corporate media and politicians tell us, the positive indicators of soaring stock market valuations, rising real estate prices and the rigged unemployment figures that don't count the jailed, the recently released from jails and prisons, and those who've given up on finding work or those working part time who desperately want full time hours real life for most real people hasn't got any better since 2008 or 2009.

==========

[Steven Gaal]

The Mystery Of Surging Q3 GDP Explained And Why Americans Are Suddenly $80 Billion "Poorer" (CLICK LINK)

In order to "suggest" that the US economy had grown by a far greater than expected run-rate, the BEA was forced to revise away personal income, and "assume" these had instead been invested in the US economy, in the form of a surge of durable goods purchases. Sure enough, while both incomes and savings tumbled, spending magically surged: So if that "statistical" amount of money you thought you had saved in the BEA's savings.xls spreadsheet just dropped by 10%, fear not dear Americans: it was all used for a good cause: to fabricate a much stronger than expected Q3 GDP number.

[Steven Gaal]

It Really Isn’t Hard To Connect The Dots And See The Real Economy In The Real World, Outside Wall Street, Is A Disaster And Getting Worse By The Hour. (CLICK LINK)

[Len Colby]

The Fourteen Year Economic Recession

http://www.marketoracle.co.uk/Article44946.html

Mar 24, 2014 - 09:28 PM GMT

By: James_Quinn

“A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men … [W]e have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.”- Woodrow Wilson

Not surprisingly this thread started with a fake quote.

http://www.salon.com/2007/12/21/woodrow_wilson_federal_reserve/

[Steven Gaal]

July 31, 2013 = Counterpunch

Economic Recovery by Statistical Manipulation

by JACK RASMUS

=

Facing the prospect of a 2nd quarter GDP report showing economic growth less than 1% (some professional forecasting services predict as low as 0.5%), and a year to year growth of the US economy likely to come in at barely 1%–compared to a 2011-12 already tepid 1.7%–today the Obama administration will announce a major revision of how it calculates GDP which will bump up GDP numbers by as much as 3% according to some estimates. That’s one way to make it appear the US economy is finally recovering again, when all other fiscal-monetary policies since 2009 have actually failed to produce a sustained recovery.

Today’s GDP definition revisions is not the first time that politicians, failing in their policies, have simply rewritten the numbers to make the failure ‘go away’. But this time, the GDP revisions will be made going all the way back to 1929. So watch for the slowing US economy GDP numbers from last October 2012 onward to be significantly revised upward.

Instead of an actual, paltry 0.4% GDP growth rate in the fourth quarter of 2012, a weak 1.6% in the first quarter 2013, and the projected 0.5%-1% for the 2nd quarter 2013—all the numbers will be revised higher in the coming GDP estimate for the 2nd quarter 2013. The true GDP growth rate of the most recent April-June 2013 period, projected as low as 0.5% by some professional macroeconmic forecasters, might not thus get reported.

President Bill Clinton played fast and loose with economic statistics as well at the end of his term, redefining who was uninsured in terms of health care coverage. The total of 50 million uninsured at the end of the 1990s, was reduced to 40 million—after having risen by ten million during his eight years in office. Today, they still claim there are only 50 million without health insurance coverage, despite the ten million more becoming unemployed since the Great Recession began in 2007, tens of millions of population increase in the US, and millions more having left the labor force.

Similarly, under President Reagan in the 1980s a raft of government statistics were ‘revised’. Unemployment in particular was revised downward by various means to make it appear fewer were jobless in the wake of the 1981-82 recession. Changes were made to inflation data as well to make it appear lower than it was, and to how manufacturing was defined to make it appear that the mass exodus of manufacturing ‘offshoring’ of jobs was not as great as it was in fact.

This writer has been forewarning of this radical shift in GDP definition since earlier this year, in a series of analyses on US GDP numbers over the past year, July 2012-June 2013, in which the warning was raised the US economy was slowing significantly—from its already weak historical 2011-2012 annual growth rates of less than 2% to around half at 1% (see my blog e

ntries at jackrasmus.com). The point was raised the Obama administration appears may use the 5 year scheduled GDP revisions to boost the appearance of the slowing US economy.

The government agency, the Bureau of Economic Analysis, responsible for the GDP numbers will explain the GDP methodology changes this week, and this writer will provide a follow up analysis of the revisions. Some initial indications have appeared in the business press as to how and why the changes are being made in GDP.

One explanation is that Gross Domestic Income (GDI) has been running well ahead of GDP (Gross Domestic Product). GDP is supposed to measure the value of goods and services produced in the US, while GDI is a measure of the income generated in the US. They are supposed to be about equal, with some adjustments for capital consumption and foreign net income flows. The idea is whatever is produced in terms of goods and services generates a roughly equivalent income. However, it appears income (GDI) is rising faster than GDP output. The BEA revisions therefore appear aimed at raising GDP to the higher GDI levels.

But income is rising faster because investors, wealthy households (2%), and their corporations are increasing their income at an accelerating pace from financial securities investments—that don’t show up in GDP calculations which consider only production of real goods and services and exclude financial securities income like stocks, bonds, and derivatives. So instead of adjusting GDI downward, the BEA will raise GDP. It appears from early press indications it will do this by reducing deductions from GDP due to research and development and by now counting some kinds of financial investments as GDP.

When GDP was developed back in the 1930s, economists purposely left out financial assets’ price appreciation in the determination of GDP. Such assets did not reflect real production of goods and services, it was determined. But today in the 21st century, massive gains in capital incomes increasingly come from financial asset appreciation. Even many non-financial corporations now accumulate up to 25% of their total profits from what are called ‘portfolio investments’—i.e. financial asset speculation. Like profits from real production, that gets distributed to shareholders in the form of capital gains, dividends, stock buybacks, etc. That income also ends up in reported ‘Gross Domestic Income’, or GDI. So capital incomes surging to record highs in recent years are showing up in a rising GDI in relation to GDP. The government’s answer is to conveniently revise GDP upward to better track GDI. But that doesn’t represent real economic growth and does represent a false recovery when measured in terms of new GDP revisions.

If GDP is revised upward, a host of other government data will have to revise up as well. That will likely include employment numbers as well. How reliable will be future jobs numbers, not just GDP numbers, is therefore a reasonable question.

Apart from making it appear the US economy is doing better than it in fact is, what are the motivations for the forthcoming redefinition of GDP, one should ask?

For one thing, it will make it appear that US federal spending as a share of GDP is less than it is and that US federal debt as a share of GDP is less than it is. That adds ammunition to the Obama administration as it heads into a major confrontation with the US House of Representatives, controlled by radical Republicans, over the coming 2014 budget and debt ceiling negotiations again in a couple of months. It also will assist the joint Obama-US House effort to cut corporate taxes by hundreds of billions of dollars more, as legislation for the same now moves rapidly through Congress in time for the budget-debt ceiling negotiations.

Revising GDP also enables the Federal Reserve to justify its plans to slow its $85 billion a month liquidity injections (quantitative easing, QE) into the banks and private investors. This ‘tapering’ was raised as a possibility last June, and set off a firestorm of financial asset price declines in a matter of days, forcing the Fed to quickly retreat. But the Fed and global bankers know QE is starting to destabilize the global economy in serious ways and both, along with the Obama administration, are looking for ways to slow and ‘taper’ its magnitude—i.e. slow the $85 billion. Redefining GDP upward, along with upward revisions to jobs in coming months, will allow the Fed to revisit ‘tapering’ after September, when the budget-debt ceiling-corporate tax cut deals are concluded between Obama and the US House Republicans. (see my lengthy article, ‘Austerity American Style’ , on this).

The Fed has stated it will begin to reduce its QE when the economy shows more growth and unemployment numbers come down to 6.5%, from the current roughly 7.5% low-ball estimate. (Other government data show unemployment at more than 14%, but politicians and the press ignore that number). Revising GDP upward will thus provide the Fed with an argument to start ‘tapering’. Fed Chairman, Ben Bernanke, is quite aware of the usefulness of the projected revisions, moreover. In his recent testimony to Congress he specifically noted that the economy was growing better than (old) GDP numbers indicate if the higher Gross Domestic Income (GDI) is considered.

It is ironic somewhat that what we are about to witness with the GDP revisions is a recognition that the economic recovery since 2009 has been a recovery for corporate profits and capital incomes, stock and bond markets, derivatives and other forms of income from financial speculation—all now at record levels—while weekly earnings for the rest continue to decline for the past four years. What the GDP revisions reflect is an attempt to adjust upward GDP to reflect in various ways the gains on financial side of the economy, the gains in income for the few and their corporations.

When you can’t get the economy going otherwise, just change the definitions and how you calculate it all. Manipulate the statistics—just as Clinton did before and Reagan even before that.

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Dr. Jack Rasmus is Professor of Political Economy at St. Marys College and the author of the 2012 book, Obama’s Economy: Recovery for the Few, Pluto books, and host of the weekly radio show, ‘Alternative Visions’, on the Progressive Radio Network. His blog is jackrasmus.com, website: www.kyklosproductions.com, and twitter handle, #drjackrasmus.