It's official: after seeing it work so well for years in China,
the US Department of Commerce's Bureau of Economic Statistics has
officially replaced all of its excel models with just one function.
The following:
As Steve Liemsan hinted a few days ago, in what we thought was a
very belated April fools joke, th eBEA has finally thrown in the
towel on weak seasonally-adjusted US GDP data, and as a result has
decided to officially proceed with a second seasonal adjustment:
one which will take all the bad data, and replaced it with nice and
sparkly, if totally fake and goalseeked, GDP numbers.
As
Bloomberg reports, "the way some parts of U.S.
gross domestic product are calculated are about to change in the
wake of the debate over persistently depressed first-quarter
growth. In a blog post published Friday, the Bureau of Economic
Analysis listed a series of alterations it will make in seasonally
adjusting data used to calculate economic growth. The changes will
be implemented with the release of the initial second-quarter GDP
estimate on July 30, the BEA said."
In other words, as of July 30, the Q1 GDP which will have
seen its final print at -1% or worse, will be revised to roughly
+1.8%, just to give the Fed the "credibility" to proceed with a
September rate hikewhich means we can now safely assume
not even the Fed will launch a "hiking cycle" at a time when the
first half GDP will print negative (assuming the Atlanta Fed's 0.7%
Q2 GDP estimate is even modestly accurate).
Will abnormally "good" data be revised lower, or whether labor
market data, which is already manipulated beyond comparison by the
BLS will also be adjusted due to "residual seasonality"? Don't hold
your breath.
And since economists pride themselves in giving complex names to
what even 5 years olds now grasp is open data manipulation, the
technical term the BEA will use to goalseek historical data is now
also clear: "
residual seasonality"
Although the agency adjusts its figures for seasonal variations,
growth in any given first quarter still tends to be weaker than in
the remaining three, economists have found, a sign there may be
some bias in the data. It’s a phenomenon economists call “
residual seasonality.”
More details on how economics has just devolved into a complete
farce on a scale that even the Chinese Department of Truth will
find laughable:
“BEA is aware of the potential for residual seasonality in GDP
and its components, and the agency is looking for ways to minimize
this phenomenon,” the division said in the post. More information
will be available in a BEA Survey of Current Business report
scheduled for mid-June publication.
The agency is exploring ways to address possible issues in
measures of federal government defense spending, where research has
shown that first- and fourth-quarter growth rates are lower on
average, the BEA said, reiterating a statement given to Bloomberg
published May 18.
It will also start seasonally adjusting some inventory
components that currently aren’t, and also some data from the U.S.
Census Bureau’s quarterly services survey, it said. The latter
should boost the accuracy of consumer spending estimates, it said.
The changes to the calculations will cover the period from 2012 to
the present.
Additionally, the BEA is reviewing all series that figure into
the GDP calculations to find and fix any leftover biases that exist
within its current methodology.
And to complete the total collapse of US reporting integrity,
here is the full BEA blog poston the topic of
goalseeked data, aka "residual seasonality."
* * *
BEA Works to Mitigate Potential Sources of Residual
Seasonality in GDP
The Bureau of Economic Analysis (BEA) is working on a
multi-pronged action plan to improve its estimates of gross
domestic product (GDP) by identifying and mitigating potential
sources of
“residual” seasonality. That’s when seasonal
patterns remain in data even after they are adjusted for
seasonal variations.
Each spring, BEA conducts an extensive review–receiving updated
seasonally adjusted data from the agencies that supply us with data
used in our calculation of GDP. Most of the data the feeds
into GDP is seasonally adjusted by the source agency, not
BEA. At the same time, BEA examines its own seasonal factors
for those series that BEA seasonally adjusts itself. All that
work takes place in preparation for BEA’s annual revision to GDP
and its major components, which will be released on July 30.
As a result of this ongoing work, BEA is aware of the potential
for residual seasonality in GDP and its components, and the agency
is looking for ways to minimize this phenomenon.
• One of the areas we’re currently reviewing is possible
residual seasonality in measures of federal government defense
services spending. Initial research suggests that the first and
fourth quarter growth rates are lower on average than those of the
third and second quarters. BEA is developing methods for addressing
what it has found.
• Time frame to implement: Improvement will take place with
the release of second quarter GDP on July 30. Period covered: 2012,
2013, 2014, and forward.
• BEA also will begin adjusting certain inventory
investment series that currently aren’t seasonally adjusted.
• Time frame to implement: Improvement will take place with
the release of second-quarter GDP on July 30. Period covered: 2012,
2013, 2014, and forward.
• Also as part of this year’s seasonal adjustment review,
BEA is planning to seasonally adjust a number of series from the
Census Bureau’s quarterly services survey that now have
sufficient time spans to which seasonal adjustment techniques
can be applied. Currently, these series are
smoothed using a four-quarter moving average to attempt to
smooth out seasonal trends in the data. While BEA’s review had not
identified residual seasonality in the PCE services estimates,
applying statistical seasonal adjustment techniques to these
indicators will improve the accuracy of the underlying trends in
PCE estimates.
• Time frame to implement: Improvement will take
place with the release of second quarter GDP on July 30.
Period covered 2012, 2013, 2014, and forward.
• BEA will review all series entering the GDP
calculations to identify, and where feasible, mitigate any residual
seasonality within its existing seasonal adjustment
methodologies.
• Time frame to implement: Review will take place with the
release of second-quarter GDP on July 30. Period covered: 2012,
2013, 2014, and forward.
• Longer term–beyond July 30–BEA will continue looking at
components of GDP to determine if there are opportunities to
improve seasonal adjustment methodologies. Should BEA
identify other areas of potential residual seasonality, BEA will
develop methods to address these findings. If research
suggests that residual seasonality originates with already
seasonally adjusted source data, BEA will work alongside its
source data agencies to determine the appropriate course of
action.
* * *
Some further thoughts: when, not if, the Fed's rate hike leads
to a recession, that too will be seasonally adjusted away. And QE4
will be called tightening in the name of "residual
seasonality."
And, of course, once the Fed's credibility finally crashes, its
seasonally adjusted credibility will be at an all time high.
