The Bureau of Labor Statistics is going to fudge it on inflation in 2022

Interesting: the Bureau of Labor Statistics has a couple of Notices on their Consumer Price Index page. One note indicates that "Starting in January 2022, weights for the Consumer Price Index will be calculated based on consumer expenditure data from 2019-2020. The BLS considered interventions, but decided to maintain normal procedures."   That's interesting. During the COVID lockdowns people bought a lot more toilet paper initially, but the most impactful change would be the reduction of fuel usage, particularly gasoline, as people were forced to stay at home, vastly reducing fuel expenditures.  This as fuel prices have started to skyrocket in 2021 and 2022. In other words, they are going to try to dampen or hide the inflation numbers they are going to share by treating it as a smaller factor in consumer spend, by using fuel expenditures during the height of COVID lockdowns as part of the calculation.  During COVID that share of spend most definitely shrunk, dramatically. That effect will take about two years to work it's way through the system, disappearing in a presidential election year.

Let's Go Brandon.

The other note states "Each year with the release of the January CPI, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year. This routine annual recalculation may result in revisions to seasonally adjusted indexes for the previous 5 years. Recalculated seasonally adjusted indexes as well as recalculated seasonal adjustment factors for the period January 2017 through December 2021 will be made available on Tuesday, February 8, 2022."

This one is a bit trickier because they have not yet posted any of the adjustments as of yet. What they do is take an item in a basket of consumer goods like say potatoes, and adjust it's cost impact based on the month of the year.  In January for example they might see it at 98.928 and in July at 103.920 but seasonally adjusted factors to smooth the months, it might be factored instead at 98.921 in January and 103.946 in July.  This sort of tweaking is done to smooth the rate towards a more annualized sort of number and make it less volatile.

That alone is not a problem.  The issue arises when they use it for politics.  There are so many items that factor into the total number that it is fairly easy to hide the fudging.  And keep in mind that this is something they typically do annually. It may amount to nothing.  It may even be a distraction from their other note.  But if some of the numbers are significantly different from what they used in 2021, it is a sign of malfeasance. The problem is that it will probably be  hard to find.   Stay tuned.

WaPo: Panic at the Propagandists' Place

The liberal pulse of Washington D.C., the Washington Post is seemingly aghast and panicked at their own headline about president Trump looking to rollback federal government employment, calling it a contraction.

President Trump’s budget proposal this week would shake the federal government to its core if enacted, culling back numerous programs and expediting a historic contraction of the federal workforce.

This would be the first time the government has executed cuts of this magnitude — and all at once — since the drawdown following World War II, economists and budget analysts said.

The spending budget Trump is set to release Thursday will offer the clearest snapshot of his vision for the size and role of government.

I would have no problem with those paragraphs if they changed just one word.  If I could fix it for you, I would change the word contraction to correction, because that's what it is. Now I am really looking forward to the president's budget.   

Let me drill down on one aspect of this.

If you look at the average number of federal employees per 1000 Americans it went from approximately 5.4 in 2006 to 5.7 in 2015 (most of it coming in 2009 as a result of the abysmal stimulus package no doubt), an increase of 5.6% in a very short period of time.  This despite the fact that the population has supposedly grown by roughly 22.8 million people during the same period (roughly 7% growth in population and yet the number of federal employees has grown enough to cover that plus 5.6%).  Interestingly, population growth was last measured in the census of 2010, when the population was 309 million.  Growth since then is only a Census Bureau projection since the census only takes place once per decade.  The numbers since then seem fairly flat in terms of year over year growth rate.  So population has grown but the number of federal employees per 1000 Americans has grown at a rate 5.6% faster than that.

Whether you feel like you are getting 5.6% better or more service is a moot point.  After all, in business they talk about productivity growth. Between 2007 and 2016 productivity growth has averaged 1.1% per year. Between If government employees got better at the rate of productivity between 2000 & 2007 it was double that rate. But let's say for the sake of argument that they got better by 1.1% per year. Between 2006 and 2015 that would mean that federal employees got 11% more productive. Yet the government felt the need to expand the workforce  by 5.6%.  Either the government employees only grew in productivity by say half the national rate, or else the government has been padding the workforce.  What other conclusion can be drawn?  And in either case, there's an inefficiency now.

Good News For Democrats Unemployment Steady

The latest jobless figures are out.  The rate is still at 9.7%.  But as Nancy Pelosi points out - passing health care will create 400,000 jobs immediately, and 4 million jobs over the next few years.  At first I thought those claims were bogus and stupid.  But in those 2700+ pages of cobbled together plan, and an extra trillion dollars in cost, I'm afraid she might be right.  The bad news is they will most likely all be government jobs trying to figure out how to manage all the new complexity of health care.  In other words, more bureaucracy.

The bureaucracy is expanding to meet the needs of an expanding bureaucracy.

~ Unknown

Some 'highlights' from the latest jobless numbers help to put things in perspective:

In February, the number of unemployed persons, at 14.9 million, was essentially unchanged, and the unemployment rate remained at 9.7 percent.

That's not an encouraging sign. Because;

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) increased from 8.3 to 8.8 million.

500,000 more people are working part time, which further masks true unemployment.  So says the liberal New York Times. In other words, in addition to the 14.9 million unemployed, 8.8 million are now under-employed not by choice.  That's a total of 23.7 million unemployed or under-employed.

About 2.5 million persons were marginally attached to the labor force in February, an increase of 476,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Another 2.5 million who didn't count - bringing our total to 26.2 million unhappy with their work situation (assuming they are all unhappy about it).  That still is around the 17.1% real unemployment figure.

Among the marginally attached, there were 1.2 million discouraged workers in February, up by 473,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.

That doesn't add to our number of out of work persons but it doesindicate the depth of those very discouraged has also gone up.

Construction employment fell by 64,000...Employment in the information industry dropped by 18,000...Employment in manufacturing was essentially unchanged in February...Retail trade employment was unchanged in February, after a sizeable increase in January...In February, temporary help services added 48,000 jobs. Since reaching a low point in September 2009, temporary help services employment has risen by 284,000...Health care employment continued to trend upward in February....In February, employment in the federal government edged up. The hiring of 15,000 temporary workers for Census 2010 was partially offset by a decline in U.S. Postal Service employment.

This indicates that there are not many areas of positive job growth, and where it has, is government.  Even there the growth has been soft (in the case of government, view it as a good thing).  Even the work week fell in February;

The average workweek for all employees on private nonfarm payrolls declined by 0.1 hour to 33.8 hours in February.

This does not bode well for the Democrats and their focus on jobs health care approach to running the country through this economic hole.

Predicition: Jobless rate will rise in August

The Bureau of Labor Statistics on September 4th will release the August unemployment figures. Expect the seasonally adjusted numbers to head back up.  That's in addition to further possible layoffs coming from other companies. I fully expect the jobless rate to climb in August to 9.6%, or more. I'm not big on pessimism, but...

In July auto makers typically lay off shifts for part of the summer. That affects the seasonal adjustment. And this year, a lot of layoffs that happened were prior to the regular layoff period, and they were more permananent than in other years. Just as the July statistic did not account for this and therefore understated the real unemployment, the August numbers will be back to reflecting reality.

If that's the case, then the DJIA will probably take a hit.  Consumer confidence likewise will be affected.  Those hoping for a V-shaped recovery or even a U-shaped one could be disappointed.  Some are calling for a W recovery now (ironic, given the monicker of the last POTUS).  I still thinka hockey stick recovery is a distinct possibility, which means years before the job losses reach the mid 2007 employment levels.  It could be well into 2013 before that happens.  Of course that assumes no further unhealthy Obama shocks to the system.