‘Modern government calculators are designed to obfuscate reality and convince people things are just ducky’
According to official government statistics, the economy is strong. Unemployment is low (about 5%) and inflation is mild (about 4%).
Yet every single American – those of us who live in the real world, not Washington’s ivory tower – knows something is wrong. A single trip to the grocery store is enough to verify that. A new survey by Intuit Credit Karma reported, “28% [of those surveyed] said they are putting off paying for necessities, such as rent or other bills, to afford groceries – while 27% say they are occasionally skipping meals. Another 18% have applied for or considered applying for food stamps and other types of assistance, and 15% rely on or have considered visiting food banks for groceries. … In other big-picture data, almost half of those surveyed, about 44%, said they feel financially unstable. The figure is even higher for people with household incomes of less than $50,000.”
But how can this be if the economy is so strong? The culprit, of course, is how things like unemployment and inflation rates are calculated. Modern government calculators are designed to obfuscate reality and convince people things are just ducky. But Shadowstats tells a different story. For those unfamiliar with Shadowstats, it is a statistical website that calculates leading indicators according to the methodology used by the government until about 30 years ago, when the methodology was altered to disguise the true state of economic affairs. As economist Peter St. Onge put it, “Every official economic number out there is broken.” Shadowstats aims to set the record straight.
According to Shadowstats’ Alternate Inflation Charts, “The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.” By the 1990 calculator, current inflation is running at about 8%. By the 1980 calculator, inflation is currently about 12%.
The Brownstone Institute notes, “The Bureau of Labor Statistics simply cannot keep up, partially because the Consumer Price Index does not calculate the following: interest on anything, taxes, housing, health insurance (accurately), homeowners insurance, car insurance, government services like public schools, shrinkflation, quality declines, substitutions due to price, or additional service fees. That’s a major part of what has gone up, which is why data on particular industries shows a huge gap (groceries up 35% over four years) and why ShadowStats estimates inflation in double digits two years running, having peaked at 17%. Just adding in interest, a paper from NBER estimates, takes 2023 inflation to 19%.”
Now consider Shadowstats’s Alternate Unemployment Charts, which notes: “The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers. The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.” By the 1994 calculator – and remember, the official government unemployment rate is currently 5% – the real unemployment rate is currently 25%.