The Illusion of Official Data

Thus far, 2023 has had one of the best starts for market investors. It seems like fears of a global recession were overblown.

After all, the US Consumer Price Index (CPI) appears to have peaked according to the official data.

Going forward, it may turn out that the Federal Reserve can claim it successfully controlled inflation.

That could be good news in Australia as our economy is largely focused on financial services and resources. Improving global conditions will spur demand for our resources, and business confidence will fuel trading activity, and hence our banks will enjoy a rise in lending activity.

However, there’s a catch to this optimistic outlook that I present. And it’s to do with official data versus reality…

Narrative building over reality

Most of you who follow my work know that governments and institutions shape a narrative using official data.

In a data-driven world, many are willing to accept this over what they actually perceive and experience.

Let me give you a few examples.

Wonder why it seems so difficult to maintain your living standards over an extended period? Well, it shouldn’t be difficult if you believe that the official statistics about the CPI rising by 2–4% each year.

But then, CPI doesn’t reflect your living standards because of the way it’s calculated. I wrote back in June 2021 about how CPI massages the costs of necessities that rise faster with luxury goods that may be falling in price due to obsolescence or technological advancement.

How about those politicians and financial pundits that tell you how the economy is doing well by referring to record levels in the stock markets? It doesn’t matter if there’s rampant unemployment (they take care of that as well, using welfare payments to discourage people from finding work) and weak business and consumer confidence.

It’s the markets, stupid! You can check out my article about how they managed to pull off this illusion.

And how about the last three years, when we kept hearing about how serious the COVID outbreak was worldwide? The news channels had you fixated on the cumulative number of cases of infections and deaths. Health officials would scare the public into believing this virus could decimate the global population.

Well, you may have recalled in July 2021 how I revealed the flawed methodology in their measurements from what they wrote on their own websites! Until recently, the corporate media would convince you that I was acting irresponsibly to downplay this major crisis and endangering the lives of many.

But now they’re saying what I pointed out 18 months ago; check it out here!

It’s all about the narrative, and they stop at nothing to bend and twist the truth in order to achieve their ends.

More sleight of hand to mask economic woes

US Government officials continue to try and downplay the destructive impact of the Biden Administration and their globalist policies by manipulating the economic data.

Recall last year how Treasury Secretary Janet Yellen wanted to deny that the US was in a recession even as the GDP declined over two consecutive quarters? I mean, that’s what economists defined as a recession, except for this one!

Well, the sophistry is about to get better.

This week, the US Bureau of Labour Statistics (BLS) is proposing to change the methodology for calculating CPI.

Just as a reminder, CPI accounts for each category of goods and services for its contribution (relative weighting) to a ‘basket’ of goods and services. The weights may vary over time. Until now, the bureau would estimate the weights based on the most recent two years’ data.

That’s about to change.

Starting next month, the index will account for the expenditure of an ‘average household’ for the 2021 calendar year rather than based on the average expenditure over two years. It’ll also adjust the calculation on new vehicles.

Most of us may wonder if that really means much at all. However, if you think deeper, there are some implications you need to take into account.

The Wuhan virus outbreak three years ago turned the world upside down, affecting businesses and individuals alike. Lockdowns and business closures caused spending habits to dramatically change as many households didn’t dine out or go on holidays. Prices dropped over 2020–21 due to lower demand, only to return with a vengeance last year.

Do you see what I see now?

Basically, the change in the calculation methodology will allow the BLS to report lower living costs. This will allow them to report falling year-on-year CPI figures for the months to come, conveniently feeding the narrative that the Federal Reserve succeeded in controlling inflation.

In turn, the Federal Reserve can claim it’s achieved the ‘soft landing’ as it seeks to restore its depleted credibility.

After all, they were the ones who failed to see inflation in 2021 when most households and businesses were clearly feeling it. And it’s responsible for the misery we experienced last year as rates increased at the fastest rate in the last three decades.

Add to this the fact that the Biden Administration drained a large proportion of the Strategic Petroleum Reserves over the past year to push the price of crude oil down. This played a part in suppressing the price of crude oil, which peaked at more than US$120 a barrel last year (~AU$185 a barrel) to US$70–80 a barrel range.

This is going to end with House Republicans taking power earlier this month. It’s just passed a resolution to ban the sale of oil reserves to foreign countries.

Since the Biden Administration is unable to use this trick to weave the illusion, it’s now going to try and pull it off with the CPI calculation.

Smoke and mirrors to clear, revealing much ugliness

The globalists may’ve pulled the wool over the world with their narrative control and rigging the system to keep themselves in power.

However, 2022 has seen a turning point in this information war, and they’re fast losing their grip over the people. After all, their unending stream of fake news is hitting a brick wall as citizen journalists and whistle-blowers expose their cover stories and hypocrisies.

I believe that while they’ll attempt to push their narratives to people who still listen to them, they’ll continue to bleed in terms of viewership, ratings, and revenues.

Notice how there’s been a raft of resignations and firings in Big Tech and also with these news outlets?

And it’s not just the corporate executives and reporters. Even the politicians who headed countries and tried to impose draconian measures on their people are now falling on their swords.

Let me tally them up — UK’s Boris Johnson, UK’s Liz Truss, Italy’s Mario Draghi, and this week, New Zealand’s Jacinda Ardern.

There’ll be more who’ll face the chop.

That might be the good news.

However, the truth is that the damage is done. The last three years have seen the world’s economy crippled, and recovery from this point is going to be slow.

It’s important to brace yourself for a rocky ride ahead.

Just because they’ve changed the goalposts and the game doesn’t mean you can’t win.

Do it with a team that has a winning strategy!

Be it in precious metals, commodities, cryptos, or using a trading system, you need to have a plan.

We’ve got something that’d suit you. Check us out.

Regards,

Brian Chu,
Editor, The Daily Reckoning Australia