I found this article a while ago and put it in my “to-post” pile and of course it never got posted. The article lays out how statistical data can be manipulated and twisted to make people think certain things are going well when in reality they are going poorly. As future engineers and technologists, you must understand the correct way to use statistical data and understand when statistical data is being presented incorrectly.
Why do people pay any attention to government statistics?
Government information doesn’t measure what it’s actually supposed to. The Consumer Price Index, for example, is supposed to measure the rate of inflation. But it doesn’t include the two biggest consumer items, food and energy, in its calculation.
The unemployment rate, which everyone made a big deal about after the December jobs report came out last Friday, is grossly miscalculated. The rate dropped from 9.8% in November to “just” 9.4% in December. It was the biggest monthly drop in unemployment since the dawn of employment…
But the drop didn’t happen because a bunch of folks found new jobs. Rather, a bunch of folks fell off the unemployment check gravy train. They used up their 99 weeks of benefits and were re-categorized. They’re now counted as “discouraged and no longer looking for work” rather than unemployed.
Here’s an idea… How about we just shoot all the unemployed folks? We don’t have to kill them, although that might be best from a budgetary standpoint. But wounding them would be enough to get them reclassified as “injured” or “disabled.” We could get the unemployment rate down to zero.
Government statistics are a farce. Yet the financial media is obsessed with them, and traders sit on pins and needles awaiting their release.
After all the build-up and hype leading into last Friday’s employment report, the Dow Jones Industrial Average opened with a 10-point gain. That’s a tiny, 0.08% move.
The same thing happened last month when the Dow moved seven points on the morning of the employment report. We got a little more volatility in November with a 20-point move. Still, that’s hardly enough to justify all the attention and anxiety leading up to the news.
Traders used to stand aside and avoid taking on new positions before the release of a major government report. There was no need to jump in front of a potentially volatile situation. But the biggest reports don’t create much volatility anymore. So there really isn’t any need to stand aside.
Perhaps Wall Street is finally putting government statistics in their proper place… third in line behind lies and damn lies.
Thanks for your attention.