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  • March 27, 2008 08:58 AM EDT by Cody Willard

    Bureau of Econ Analysis: You Get What You Pay For

    The multi-talented Mark Lieberman, senior economist at Fox Biz, just sent out this to all of us at the network:

    GDP grew at a 0.6% quarterly rate anualized in 4Q '07, according to today's "final" report, the same growth rate as reported in the advance and preliminary estimates. According to the Bureau of Economic Analysis, this is the first time all three GDP reports have been the same since BEA began producing three estimates of each quarterly result in 1977.

    So for the first time EVER in the 30 year history of the government keeping track of this stuff, they actually got it right when they initially and secondarily reported this stuff?    And people actually wonder why I think these government reports are such a waste of time and energy for investors and traders....not to mention the waste of money for taxpayers who foot the bill for the billions that it takes for these bureaucrats and their cronies to put together this worthless data.

    It's why I always tell people to get their economic data from private research groups -- sorta like why most people prefer a private bathroom to a public one...you get what you pay for, no?   And to get trends and information about the economy, you gotta listen to company conference calls and read everything you can get your hands on...don't get me wrong, those executives on the conference calls lie all the time too, but this is one case where I'm willing to take the lesser of two evils (unlike when it comes to voting where I don't get the idea of condoning, much less trying to put in power any form of evil, even a lesser of two, btw).

    Speaking of which, the Oracle call last night wasn't half bad, despite the trashing of the stock today.  Not a favorite name of mine, but not a bad play on tech into the summer either.  I'd prefer Adobe here though.

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SD

More grist for the Dept of Poorly Constructed Economic Data ... "After the Census Bureau releases the preliminary New Home sales estimate, they revise the estimate three times (over the next three months) as more data becomes available. Historically the revisions can be in either direction - higher or lower - but beginning in 2005 I noticed that most of the revisions were down. All of the revisions (between preliminary and final) were down in 2006 and for most of 2007. It appeared that the Census Bureau had a systemic error in estimating preliminary sales during periods of rapidly declining sales(...)" http://calculatedrisk.blogspot.com/2008/03/new-home-sales-revisions.html This is a governmental report that has a statistical confidence interval of over 10%. In other words, a 10% rise or decline in new home sales from one month to another isn't even a statistically significant change!

March 27, 2008 at 3:33 pm

SD

As far as GDP there was an article in this week's Economist on how an overall stat like that is misrepresentative since population growth is built into it so we should really be looking at things per capita. (Per capita income apparently rose more quickly over the last 5 years in Japan than it did in the US.) Pollution and stuff like that (estimated annually at 10% of output in China) is also overlooked. I think the average revision from the 1st report to the last revision is something like between 0.5% and 1.0% on average.

March 27, 2008 at 9:44 am

SD

Interestingly private research groups have recently replicated 2 of the major US economic releases that the government had control over. There's the ADP report (computed by Macroeconomic Advisers and based upon data from ADP payroll services covering hundreds of thousands of firms and millions of employees) that proxies non-farm payrolls and is released 48 hours before it. With less media attention but a still comprehensive scope MasterCard SpendingPulse proxies retail sales. IIRC the report is based upon credit card sales that cover 20% of the country's retail spending. So we have checks on government reports in those areas. As far as the much maligned inflation reports published by the BLS, I guess a libertarian economist would say we have commodity prices and interest rate markets to look at as a check.

March 27, 2008 at 9:14 am

about this blog

  • Cody Willard is an anchor on the FOX Business Network. Willard is also the principal of an investment management company. He was a long-time featured columnist for the Financial Times and TheStreet.com as well as a regular featured economist and stock picker on CNBC's ''Kudlow & Company."

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