Sometimes manipulation gets explained …

Sometimes manipulation gets explained … here the last example.

Just read through these excerpts of a Marketwatch.com article. After reading it, you will EVEN LESS be ready to give weight to any number which is released by the Government …

Here we go …

The week’s biggest report, the GDP revision on Friday, could be ugly. Economists were expecting GDP to fall 5% when the first estimate came out last month, but were pleasantly surprised with a minus 3.8% reading. Still bad, but not horrendous.

However, it looks like they were right in the first place.

The government will release its second GDP estimate on Friday. Economists surveyed by MarketWatch are now expecting GDP to fall 5.5% at an annual rate, the worst since 1982. And they are expecting another decline in the same ballpark in the current quarter; the current estimate is a 4.8% drop. Since the late 1940s, GDP has never fallen by more than 5% two quarters in a row, and has fallen by more than 4% twice in a row only twice before.

NOW THE IMPORTANT PART …

The government statisticians don’t have all the monthly data they need when they make their first estimate of economic growth, so they have to make educated guesses about foreign trade, construction spending and inventories. (Indeed, much of what’s reported about the services side of the economy is also an educated guess, with reliable data available only on an annual basis, which is why GDP keeps getting revised long after anyone really cares.)

Some of the assumptions made by the government in the first pass appear “to have been far too optimistic,” according to Stephen Stanley, chief economist for RBS Greenwich Capital. Usually, a too-optimistic estimate for trade might be offset by a too-pessimistic assumption on inventories, so they somewhat cancel out.
But this time, it appears the government was too optimistic on almost every key sector, as often happens when the economy is shrinking quickly.

The biggest changes are likely to come from inventories and from the foreign trade sector, which almost single-handedly kept GDP positive in the first half of 2008 even while the economy was in a recession. Strong exports offset weakness in domestic spending and investment.

But that’s all changed. Global markets have now fallen into a sharp recession and aren’t buying nearly as much American-made stuff.
The government also assumed more inventory stockpiling in the fourth quarter than has been reported in the updated monthly reports. That means inventories didn’t contribute nearly as much to GDP as the 1.3 percentage points that was initially assumed.

The revision to GDP will probably also show less investment in equipment, software and structures. And consumer spending probably was weaker than initially assumed as well.

So … perfectly explained, why the number was “surprisingly” strong last month …

And … just remember … housing and employment numbers over the last months … ALL came in ugly … but a BIT better looking as the previous month numbers always were revised DOWNWARDS … and by doing so … the changes were left looking smaller …

Just call it MANIPULATION … nothing else …

Why? Because we can … YES, WE CAN

Tags: manipulation

This entry was posted on Sonntag, Februar 22nd, 2009 at 23:04 and is filed under FDAX. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.