Friday, March 14, 2014

Adjust As Needed

Does anyone ever notice the highlighted phrase in the Census Bureau’s report on economic progress, I wonder? When they say, for instance, that “retail and food services sales for February, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $427.2 billion, an increase of 0.3 percent (±0.5%)* from the previous month, and 1.5 percent (±0.9%) above February 2013,” that would appear to indicate that retail sales are increasing. But does it?

I think they forgot to adjust for the phases of the moon, and perhaps the adiabatic effect of the current solar wind, but we’ll have to live with those inaccuracies.

What are those “price changes” for which they are not adjusting? Correct me if I’m wrong, but I believe those are due to something called “inflation.”

Isn’t that interesting? How often do you read that the budget, or taxes, or some such thing “adjusted for inflation” is stable? But we are always informed that retail sales “not adjusted for price changes” is increasing by some small amount which, if you check carefully, is somewhat less than the amount reported for inflation.

Looking at retail sales of “1.5 percent (±0.9%) above February 2013,” which doesn’t need to be “adjusted for seasonal variation and holiday and trading-day differences” because February of 2013 does not differ in any of those respects from February of 2014, and using the good sense to adjust for inflation of 1.6%, we would sensibly report that February’s retail sales were down 0.1 percent (±0.9%) below February 2013,” People are actually buying less; they're just paying more for what they're buying.

Even that is less than an accurate picture since the reported inflation omits energy and food, which constitutes a major portion of retail sales.

I’m not trying to suggest that the Census Bureau has any sort of political axe to grind with their reporting, I’m merely suggesting that their reporting is idiotic.

No comments:

Post a Comment