Janet…….We Shrunk The Recovery! Durable Goods Shipments Since 2012 Revised Down By $440 Billion

Friday, May 27, 2016
By Paul Martin

by Jeffrey P. Snider
DavidStockmansContraCorner.com
May 27, 2016

As if something out of bad dream, the economy continues to shrink. Actually, the economy has been shrunken this whole time, it is only the full recovery narrative that has shriveled as each drastic data revision blasts apart what little is left of the positivity. We are made to believe that government data providers go out into the economy and actually count what is going, leaving us forever confident that the numbers and the numbers. In reality, these are all stochastic processes that are nothing more than chained monthly modeled variations and thus are subject to all manner of interpretations.

Benchmark revisions act as a check on the accuracy and validity of the “high frequency” models of those variations. Every five years, the Census Bureau conducts a full-scale Economic Census with which to complete a comprehensive review. Because of its exhaustive size and scope, it takes years before the data can be incorporated into each of these economic accounts. The earliest touch of the 2012 Economic Census didn’t start until late 2014, but it really didn’t start to reveal the rampant over-estimation until last year.

That means that until these past few years, the stochastic estimations of monthly variance were based upon the 2007 Economic Census, with pre-crisis conditions as the most basic assumption of how the data “should” behave. I have referred to these before, the latest being Industrial Production especially of consumer goods. Last year, there were also massive revisions to everything from retail and wholesale sales to durable and capital goods. At the May 2015 benchmark revision for durable goods, I wrote:

Given the benchmark changes in retail sales, none of these changes are a surprise except perhaps the degree to which they were carried out in 2013. What that accomplishes is an after-the-fact agreement that the recovery got much worse after 2012, not better, and it further highlights the now-enormous dichotomy between spending and employment figures. Just as the rebound in 2013 disappeared, there is little to suggest that the 2014 version was anything other than a statistical mirage. Why would companies suddenly start hiring at a multi-decade high suddenly in 2014 when 2013 was really rather atrocious? [emphasis added]

The Rest…HERE

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