One of my most popular columns was about escaping from the Matrix existence in which Americans live. It is a world of disinformation and misinformation in which facts are fiction, and abstract theories are substituted for empirical reality.
Official government statistics are make-believe. The government makes inflation and unemployment disappear by how it defines inflation and unemployment, and it makes the economy grow by how it defines Gross Domestic Product. The definitional basis determines the statistical result.
The Bureau of Economic Analysis has revised the National Income and Product Accounts all the way back to 1928. With the release of Q2 GDP, Gross Domestic Product magically added $559.8 billion to 2012 GDP in current dollars. Additionally the chained dollar base year was changed from 2005 to 2009, a very funky year where some deflation from 2008 was still present.
Many of us are aware of the TIME magazine investigation about hospitals charging us $12 for those little paper pill cups. Those little cups add up to millions of dollars a year; but those little red and blue pills that Big Pharma pushes on us add up to billions. And many times the taxpayers are illegally billed for those little cups and pills. But because of budget cuts, the Inspector General may no longer investigate these abuses and fraud.
President Obama gave a speech on winding down Freddie Mac and Fannie Mae, the GSEs often blamed for the housing crisis and a darling of conservative ire. Government sponsored enterprises, or GSEs buy up mortgages from private lenders and the theory is to loosen up funds to stir additional lending.
The U.S. June 2013 monthly trade deficit cliff dove -22.4% from last month to $34.2 billion. This is the smallest trade deficit since October 2009 when the world was plunged into a global recession. A combination of a dramatic drop in oil imports along with solid U.S. exports in fuel oil, capital goods and jewelry was the reason for the deficit decline. Q2 GDP should be revised upward past 2.0% as shown below.
The July 2013 ISM Non-manufacturing report shows the overall index increased, 3.8 percentage points, to 56.0%. The NMI is also referred to as the services index and the increase indicates faster growth for the service sector. The business activity index soared by 8.7 percentage points to 60.4%, a high not seen since December 2012.
The GOP has a new jobs bill. House Republican Representatives Ted Poe of Texas and Raul Labrador of Idaho have proposed nearly twice as many annual visas for low-skilled guest workers than the Senate bill had included in its version of an immigration bill. The House will propose nearly 400,000 new H-2B visas for temporary foreign guest workers in non-agricultural work (for unskilled and semi-skilled labor.)
The BLS employment report shows the official unemployment rate declined two percentage points to 7.4%, mainly on a lower labor participation rate and more people being considered not part of the labor force. This is the lowest official unemployment rate since December 2008 and at least a percentage point of the unemployment rate drop is due to the decline in labor force participation. More people were employed as well. People stuck in part-time jobs maintained their increases from last month.
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