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Posted on 01/07/2004 4:26:24 PM PST by evaporation-plus
Accounting Problems Found in Major US Economic Indices Contact: Dan Spillane DanSLegal@aol.com Citizens for Corporate Accountability 410 Denny Way #229 Seattle, WA 98122 (206) 860-2858
(Update 3, adds comments)
(SEATTLE) 01/06/04 – In a troubling sign that accounting problems have grown beyond corporate balance sheets, two of the main economic gauges used by Wall Street, banks, and in the calculation of Social Security payments have been found to contain serious math problems.
The problems were identified in the Consumer Price Index(CPI) and Producer Price Index(PPI) by examining contents of tables provided by the US Bureau of Labor Statistics, and comparing weightings for the most recent years.
According to the tables, in the energy category, at least two changes appeared to reduce energy cost weightings in the indices, including one which reduces importance of “fuels and utilities”in the overall CPI index by a whopping ten percent(1), and another which pushes winter energy cost calculations into summer(2).
In the education category, the weighting of college, elementary tuition, and childcare was reduced between 2001 and 2002.
In the housing category, the weighting of “hotels and motels” was increased (against the backdrop of post-Sept 11th falls in hotel costs), while at the same time, “housing at school” got less weighting.
Finally, in the most recent table which rates relative cost importance, health insurance is placed below other cost categories such as “recreational reading materials”, “Pets”, and “Toys” (3).
Taken together, these problems shed light on why consumers and domestic businesses are under severe pressure, whereas multi-national companies--who operate largely overseas or outsource overseas--are reaping huge benefits, on top of the recent tax breaks. Stated simply, the true picture in the US is an inflationary environment where Americans pay more and don't have jobs, but bad accounting makes these costs disappear.
These findings are significant because they represent areas of ever-increasing costs which are not being reported, in contrast to reports recently from the administration claiming a healthy economy with low inflation. Retirees, for example, would have received smaller Social Security checks due to CPI miscalculations, and banks may have made loans without properly accounting for risk.
Moreover, there is serious question as to how domestic companies can hire in the US under conditions of increasing cost. In fact, outsourcing abroad has exploded, according to several recent reports.
No source of independent review for the BLS statistics could be found.
#####
Footnotes:
(1) ”Relative Importance” ”Housing Fuels and Utilities” et al, US Bureau of Labor Statistics table, www.bls.gov, entry CPI 4.934(2001) vs. 4.469(2002)-- representing a reduction of ten percent in the weighting, in the face of rising costs.
(2) 2003 Inflation Data Hacked ---------------------------- CHRISTMAS ENERGY COSTS MOVED TO SUMMER!
Seasonal weightings changed in producer price index in 2003 vs. 2002. It also looks like there is significant hacking starting in 2001 (what politics have changed since 2000?) Category WPS055 UTILITY NATURAL GAS
2002 WPS 0555 106.4 104.1 101.4 98.9 100.0 98.0 97.9 94.6 94.6 96.4 102.4 104.5 2003 WPS 0555 105.7 103.5 100.9 98.5 100.1 98.7 97.0 96.8 96.7 97.3 101.9 102.5 -.7 -.6 -.5 +.7 -.9 +2.2 +2.1 -.5 -2.0
Net change 2002 to 2003 (Cold months)Dec-Jan-Feb-Mar -4.3 weighting (Warm months)Jun-Jul-Aug-Sept +4.1 weighting --> Christmas in JULY
See graph where prices of natural gas are higher in general recently, and more so during cold months. In addition, it was recently reported that oil prices are at multi-decade highs (oil econ. alt. to nat gas).
(3) Based on statistics from the American Medical Association, recent health insurance costs paid by the individual represent an amount approximately twenty times greater than that represented in the published CPI. Employer portions have a similar rise, but are not accounted for in the CPI. Posted at 7:48:52 AM EDT by DanSpillane
Wednesday, January 7, 2004
Posted at 7:48:49 AM EDT by DanSpillane
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They gotta be kidding.
We will have inflation, we will have increases in interest rates, and the dollar will fall and gold will go up as long as we continue to have very large federal budget deficits.
They are all too serious.
I don't doubt for one second it is a deliberate facade by the government to avoid incurring CPI-linked COLAs in entitlment payments, and avoid shocking our friendly central bank lenders (whom we need to buy $320B worth of our worthless debt each year) that they'll be repaid in devalued dollars.
So the deflation in things people don't buy is used to offset the inflation in things people must buy.
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