Seasonally Adjusted Data: Does It Make The Data More Useful?

The Data You Rely On Might As Well Be Picked From A Cloud

Employment Numbers Are A Driving Market Statistic

Twelve times a year the financial markets sit on the edge of their seats waiting for the release of the Non-Farm Payroll data. Stock prices can soar or sink, politicians can claim success or suffer negative headlines and in theory, businesses just might alter future business plans based on what they are seeing.

Earlier this month I asked if we live in a seasonally adjusted world:

https://ejmoosa.com/do-you-function-in-a-seasonally-adjusted-world/

What other aspects of our life are seasonally adjusted when we are given the data? Not many if any at all. You would not shop for a vehicle using seasonally adjusted pricing. Nor would you dress properly for winter with a seasonally adjusted forecast.

Magnitude of the Adjustments

Watching Fox Business News or CNBC and watching the guests discuss their estimates for the Non-Farm Payroll number, never did I imagine the magnitude of the adjustments being made. For example, if the estimates ranged from 175k to 250k, I thought the Seasonal adjustment might be 40-50,000. Not the magnitude I found. Let’s have a look:(remember that the Seasonally adjusted data released is the real number plus( or minus) the numbers for the month listed below):

Jan:  3,050,000

Feb:  (691,636)

March: (603,545)

April: (853,545)

May: (593,929)

June: (326,364)

July: 1,271,000

August: (156,700)

Sept.: (378,300)

October: (780,300)

Nov: (277,400)

Dec: 347,300

Seasonal Adjustments Leave False Impressions

Looking at just how large the adjustments are for each month is puzzling. Take a look at the average January adjustment listed :3,050,000. In reality, the economy could actually shrink by 2,000,000 jobs and the BLS will report that we added 1,050,000 jobs for the month of January. Does that make sense to you?

It makes no sense to be because what is reported and what is actually happening is not the same.

How do businesses make solid decisions on what is happening and what they should be doing to take advantage of the data if the data does not reflect the real world?

Is the American public too stupid to understand that lots of jobs are lost in January as the temporary Christmas jobs are terminated? Or do the seasonal adjustments mislead the Public because it is so easy to seasonally adjust giving people the perception of a more level and consistent economic environment?

What’s the Solution?

Because of the disconnect between Seasonally Adjusted Data and reality, I suggest we reduce the reliance on such misleading data. And to dump your investments in one sector and buy in another because of a blockbuster jobs number that is more a work of fiction than fact is likely a mistake.

But those that are profiting from this are those that make money when you buy and sell. They like this volatility created by the data because it causes knee-jerk reactions across the financial spectrum.

An obviously fictionalized number depicting economic activity that is anything but accurate is no way to manage your portfolio.

And that is the Naked Truth.

Inflation is Rising and Packaging is Shrinking

The Double Whammy of Inflation and Shrinkflation Are Just Getting Started

In a steep acceleration for prices where many people live, FRED is gracious enough to show us the rate of inflation for June 2021 along with a chart dating back well before 1970.

Source: https://research.stlouisfed.org/publications/page1-econ/2021/07/15/inflation-expectations-the-phillips-curve-and-the-feds-dual-mandate?utm_medium=email&utm_campaign=202108%20Research%20Newsletter&utm_content=202108%20Research%20Newsletter+CID_921402a9d24e9c41b5beabca068bd6cc&utm_source=Research%20newsletter&utm_term=Page%20One%20Economics%20essay

Ironies

Ironically, the story linked above justifies higher inflation than zero to prevent deflation(prices falling) yet if you look at the chart image, deflation has rarely been an issue over the last fifty years(2010).

Shrinkflation: What You Think You See May Not Be What You Get

Pictured below are two Tillamook Ice Cream containers. The product on the store shelves offered both containers for the same price: $5.99. That translates to an increase of 14.2% in price. Because the containers shrank and the prices are the same we call this Shrinkflation. And it stinks.

It stinks because unless you look carefully you might not notice the differences.

Shrinkflation: Same Price but a smaller Container. At least it has the same great taste, right?

Have you looked closely at your shredded cheeses lately? Choose carefully. While many are still 8 ounces(Two Cups) more and more are down to 7 ounces (or less).

Packages across the board are shrinking and this hides the real inflation we are seeing every day as they hold prices the same but you get less.

Hiding the inflation does all consumers a disservice. If the inflation is hidden from us, then we as consumers are not getting a clear perception of what our currency can and cannot buy.

Your dollars are losing their purchasing power. And at 5% or higher inflation, they will be losing that purchasing power faster than anyone has witnessed since the 1980s.

Unless you are getting salary increases to keep up with inflation, you and your family are going to be falling behind economically.

“Adjusted for inflation, hourly compensation fell 2.7 percent in the second quarter, data released by the Bureau of Labor Statistics on the nonfarm business sector showed Tuesday.” Source: Breitbart

Conclusion:

Choosing a rate of inflation at 2% or higher and calling your currency stable is simply false. Sooner or later the flames of inflation will jump the perceived control of the Fed and burh through the economy creating havoc and harm.

The US Dollar needs to be tied to a stable form of money such as gold, and interest rates need to be allowed to rise and fall as supply and demand dictate.

The damage we are doing to our economic well being will not be reversed any time soon and the cures for the damage are likely to accelerate the damage as we have seen in years past.

Do You Function In A Seasonally Adjusted World?

Seasonally Adjusted Data: Does it Help?

Last Friday (August 6,2021) the Bureau of Labor Statistics (BLS) released their preliminary jobs data for July and it was a doozy. The BLS reported that 943,000 jobs were added to the economy in July. 2021.

Sounds pretty impressive right? Too good to be true? Well, it really is too good to be true. Worse, it’s a lie.

Work in The Real Economy

In the real world where people get up and go to work and get a check for their labors is not seasonally adjusted. Fortunately, the BLS also shares that data(but no one else seems to notice it). Without the seasonal adjustments, the economy lost 133,000 jobs in July.

Let me repeat that: There were 133,000 fewer jobs earning pay in July than in June.

Seasonal Adjustments

Trying to think of what other aspects of our lives have seasonal adjustments I simply could not come up with any. We have seen that gasoline prices tend to rise in the summer and fall towards winter, but I’ve yet to hear any seasonal adjustments applied to the gas price to make these changes seem more palatable for us.

How Much Is This Seasonal Adjustment?

Non-Farm Payroll For July
NSASAAdjustment
2016-9733711344
2017-11032281331
2018-11641491313
2019-10581931251
202060617261120
2021-1339431076
Comparison of Job Numbers Adjustment 2016-2021

Million Plus Jobs Added Every July

As you can see in the table above, the BLS adds more than 1 million jobs every July. The jobs must be taken away during other months when we actually have created jobs. Does this lead to better decisions made by those that use this data? It’s hard for me to see how that is possible when the whole objective is meant to gauge the health of the US economy.

In our situation for July, we would have to lose more than 1 million jobs in July to even get close to showing no job growth. I find that simply stunning. Even in a terribly July, we’d still find solace that we were still adding jobs to the economy with the Seasonally Adjusted NFP (although we’d be lying to ourselves).

Using Unadjusted Numbers Paints a Different Picture

Would you have a different picture of the economy if we used the real data? Let’s look at this potential headline if we used the real data:

“July NFP Loses 133,000 Jobs Despite Low Interest Rates and States Re-Opening”

I think it speaks for itself. Don’t you? Somewhere, George Orwell is smiling knowing that he was right.

Corporate Profit Growth Continues to Sink

Corporate profit growth is an excellent indicator of the health of an economy. After all, the reason one is in business is to generally grow profits.

As I have written in years past Know Profit No Growth (No Profits No Growth)

For the 10 years ending the first quarter of 2021, profit growth has fallen to 3.6% annually. Compare that to the ten years ending the first quarter of 2011 and you see just how poor we are doing: 10%.

Think about that. With all of the Fed easing, corporate tax cuts, ultra low interest rates and government giving out money, we have 1/3 of the growth of the previous decade.

So is the Fed keeping us afloat, or are they the cause of what ails us. I know what I believe. Below is an image of the rate of profit growth annually for the ten years ending in the year listed (first quarter each year). And for kicks, I’ve included the numbers of what the Fed balance sheet was along the way.

Slow Motion Economic Disaster is Accelerating

If You Blame Covid-19, Then Think Again

At some point, one has to believe the data over the hyperbole, and the facts over the fiction. But the people in the United States have become so short-sighted, it’s likely they could not even tell you where they were last New Year’s Eve without looking at their phone for visual proof, such as photos.

Ask those same people what happened to the “greatest US economy ever” and the responses will center around Covid-19-a flu that has garnered a response like none we have ever seen in the US.

But I believe that they are wrong, and that Covid-19 is being used by both parties for what they will believe can be political gain.

Third Quarter of 2019 the Slowdown Began In Earnest

The data is out there and you can prove it to yourself if you are willing to look. I have.

The third quarter of 2019 saw profit growth per share for the companies in the Value Line financial subscription fall from 15.35% growth to 1.81%. That sort of slowdown is very detrimental to the political party holding the White House.

In fact, it is slow enough that I would state that it would be likely that Trump lose in 2020 unless there was some incredible reversal, which would have needed some sort of catalyst to occur.

Fourth Quarter of 2019 Prior to Covid-19

Comparing the fourth quarter of 2019’s performance to 2018 is even more horrific. Profit growth per share was down 11.98%. Companies, on a per share basis, earned 11.98% less than the previous year.

Yet Trump and Company still kept touting this economy as the greatest ever. On the other hand, i knew we were heading towards a recession. Companies do not just stop generating profits.

Along Comes Covid-19

For years I have demonstrated how easy it is to forecast the Presidential Race by looking at just one number. Corporate profits after taxes has accurately predicted the outcome for every election since 1972 except for one-1976. And that was the only time we had a non-elected incumbent running for re-election.

I have to believe that both parties are aware of how important the economy is during an election year to the outcome. The question one must ask oneself is that if knowing the economic slowdown that was happening, would either party try to exploit Covid-19?

For instance, would the Republican Party use Covid-19 as cover for an economy that was clearly heading towards a recession, so that the flu would be blamed for the economy’s dismal performance?

And would the Democratic Party use Covid-19 to guarantee that the US Economy was in the tank as voters decide who to elect in November?

The Answer is Clearly Yes

Trump had nothing to lose by blaming Covid-19 for the sudden demise of the US economy. Without it, I feel he was certainly heading towards a loss even if Biden would ultimately be the nominee.

And the Democrats would have no problem sacrificing the economy in order to keep it in the tank as long as possible in order to help their agenda.

But rather than just stick to the economic impact, the Democrats have embraced the greatest move towards socialism we have ever witnessed. And this action just might move the mind of the voters off of the economic issues and onto the socialism issue, which will likely be their undoing.

Make No Mistake The Economy Was Grinding to A Halt

The economic damage that has happened and continues to happen all around us cannot be underestimated. It s worsening day by day.

Covid-19 will be the scapegoat for all of it. Yet I will know that Covid-19 was a political flu.

And the United States will NEVER be the same again.

Was it worth it?

Health Crisis or Math Crisis?

As we watch events unfold and slowly but truly we see the truth coming out about the data, analysis, and forecasting models used to shut us down, it seems that all of this could be avoided with better math and analytical skills across the board.


And while we are only local peons(no offense to anyone), how can we drive the conversation forward that Math does matter?  That proper analysis does matter?  That the “experts” are not necessarily experts?


It appears that much of the modeling used for not only traffic, but the Congressional Budget Office, epidemic forecasting, economic forecasting, global warming and more, is static, for starters.  It needs to be dynamic forecasting.


Beyond that, the baseline assumptions of the “experts” are just wrong.  And it is costing everyone across the nation this time.


I can already hear some saying “What difference does it make?  We were trying to save lives.”

Emergencies were declared

Educations were put on hold

Jobs were lost.

Homes were lost.

Constitutions at the state and national level were violated.

Suicides rose.

Drug and alcohol abuse went up.

Domestic violence increased.

What difference does it make? It’s a matter of life and death.

Most importantly, while this is the first time this has occurred it will not be the last time.  And the next time, you can anticipate that governors act faster with less information than they did this time.  All for your own good.

These decisions were not based individually by all fifty governors in the US either. They instead were based on a few points of failure, namely the CDC and whomever Trump has chosen to listen to on this issue. Can we afford such single points of failure for a nation of more than 340 million residents?

Math matters. Proper analysis matters.

And emotional responses can kill people, have unintended consequences and cause mor harm than good.

Often we hear that the needs of the many outweigh the needs of the few. Or that we are doing this for the greater good.

Unfortunately, we seem to have done this for the few at the expense of the many. At what cost?

Government cannot end death. No matter how much is spent or what is sacrificed.

But you have seen what government is willing to do without solid statistical analysis.

It will take away your rights.

It will decide what is essential and not essential for you.

It will cite you and fine you for not following their ill conceived demands.

It will turn your neighbors into agents of the state and have them tell on you if you do not follow their guidelines.

With all of the things we see that can and will happen in a Constitutional Republic, just imagine what happens if the wrong charismatic leader is elected.

Think about that.

Georgia’s Anemic Job Growth

Southeastern Job Growth
2019 JobsTotal Jobs% Growth
Florida21200091040002.33%
Alabama4570021033002.17%
North Carolina9390045936002.04%
Tennessee4920031365001.57%
Georgia6670046537001.43%
South Carolina2720021937001.24%

While Georgia may have the second largest number of jobs relative to it’s neighboring states, the rate of job growth has Georgia only beating South Carolina.

As our tax burdens continue to increase in Georgia, and we work to attract more and more bodies to Georgia, we need to ask ourselves if we have are already being taxed at a level that is slowing business development.

Or we can just keep increasing the tax burden and hope for a better tomorrow.

Johns Creek City Council Approves CVB Request for Gateway Markers

Visitors to Johns Creek are apparently unable to recognize that this sign denotes where Johns Creek starts.

Apparently the majority on the City Council has forgotten that the Convention Visitor’s Bureau is NOT a charitable organization and their funds are dollars fleeced collected in taxes on individuals who generally have no say in the matter if they need a hotel room(none of us really have a say in the matter do we?)

City Council Treats CVB Dollars as Gift

Instead we see Council Members fawning over the “hard work” of the CVB to spend the tax dollars as if they have either earned the money themselves or that they have raised it in donations.

Adding insults to injuries were many comments made to justify shifting funds away from one project and to the Gateway Markers. Wasn’t Johns Creek supposed to “be the EXCEPTION? Instead we are working overtime to do what everyone else is doing. We are establishing and operating every aspect of government all the other cities around us have implemented. Rather than challenge ourselves and ask “Is this really necessary any longer” we continue to keep collecting the tax dollars and doling them out on projects and causes that any rational person would not claim is fundamentally boosting tourism.

Working overtime is not an understatement as this issue has been addressed for many valuable hours. Think about that. What might all the costs be so far between staff hours, emails, work session meetings, council meetings and behind the scene conversations? If time is money, we should consider how much time is allocated for these issues. Better yet we should eliminate this from being an issue in the first place. Eliminate the Hotel/Motel tax.

Johns Creek had revenues of 88.6 million dollars in 2018(source:CAFR Johns Creek).

The dollars the CVB has to spend is less than 1/3 of 1% of the annual revenues for Johns Creek and yet it has consumed so much time of the seven council members for the last 6 months.

What’s Wrong With Giving Tax Dollars to a Volunteer Group to Spend as they See Fit?

Everything of course. Taxes take money by force. As a taxpayer you have no choice. Want a hotel room in Johns Creek? You’ll pay the tax.

Ironically, we all know that tax dollars are wasted at the local, state and federal levels. Yet no one with the power to actually do something about that waste does so when they have the chance. We do now. Eliminate the Hotel/Motel tax.

I’ll be blunt. Having an “expert” decide what we are missing is Gateway Markers is a farce. It’s always puzzled me why in a City with the highly educated residents we have, we seek opinions and hire people outside of Johns Creek. Why not spend the money we collect locally and boost our own economy?

We have a manufactured “problem” that government must now fix. And rest assured, the consultant was going to find something. Somehow more than 80,000 of us live in Johns Creek and yet the issue is that some people do not know where the City Lines are located. And that is what ails us?

Who knows where Brookhaven ends and Buckhead starts at every entrance? Vinings and Smyrna? Suwanee and Duluth? Does that really drive your dining decisions? Your business decisions? Your choice of doctor?

These are “political” boundaries. They are not OUR boundaries. You cannot force people to self-identify because of your arbitrary legal boundaries.

Have you considered that during the Comprehensive Land Use Plan process, we constantly heard about the different Character Areas. Residents do not know where one ends and one begins. Yet somehow we know who we are.

Or do we? Are we mere sheep waiting for the City Government to tell us who we are and what we represent? Are you? Not me.

I’m reminded of all the drug commercials on TV. I did not even know I had a problem until I saw the commercial. Now I need to call the doctor to find out how to resolve my newfound issue. Yet before that commercial, I was perfectly content.

That’s how it works when you give “experts” lots of money to come in and tell you what you are missing. If you don’t already know, then you must not be missing it.

While the CVB has been asleep at the cash box, businesses in South Forsyth are calling themselves Johns Creek. There’s even a body shop three miles into Forsyth County calling itself a Johns Creek business(perhaps a Gateway Marker there is a good idea?)

“It’s a compliment”, Council Member Bradberry said when asked about it. And he is right.

Bradberry asked about return on investment for the three items that “CVB” wants to spend money(our tax dollars) on. They were:

  • The Wall That Heals
  • The River Corridor Greenway
  • Gateway Markers

While Bradberry did not get any answer that one could use, other Council Members saw the benefit. There was no return on investment cited other than it was something we were missing and needed.

Bradberry said “It would be great if people knew they were in Johns Creek because the streets were cleaner, the medians were beautiful and the traffic lights and intersections were such that traffic was better, and that is how you knew you were in Johns Creek- that we did it better than our neighboring cities”.

Bradberry is correct. That is leadership by example. Not leadership by Gateway Markers.

Bradberry’s desires are basic government functions. Nothing is stopping this Council from doing this today. Not money. Not time. Even Mayor Bodker seemed to acknowledge we were not doing as good as we once did.

Council Member Zaprowski believes it would be nice to have a Gateway Marker to help people find his business when giving directions. Seriously? Your patients do not use Waze for navigation? Google Maps? After all, Johns Creek is a Partner City. And we do have signs announcing Johns Creek is a partner with Waze at all of our entrances.

Zaprowski gets the award for the strangest logic of the evening. He was against Gateway Markers but voting for it and for the Greenway but was voting against it.

This City Council really needs to grow up. Wasting hours and hours on this is beyond ridiculous. For example, after six months of fiscal year 2019 we have $1,000,000 more in revenues and $1,000,000 less in expenses. That’s $2,000,000 that only one Council Member asked about. Council Member Endres asked several questions while the City Manager gave brief and less than helpful generic responses. This is the same Council that could not see fit to cut property taxes despite the overwhelming evidence presented by Council Member Endres that we were actually increasing taxes.

The same City Council that will spend dozens of hours debating BS “feel-good gotta do something” projects seem to be blind to the multi-million dollar issues.

It needs to quit treating tax dollars as charitable contributions and the CVB as a benefactor. It needs to address the real issues.

Of course that is really hard work. And it is certainly more mundane. The truth is that they will spend less time debating the millage rate this summer than they have spent on Gateway Markers.

This Council would rather dream and fantasize on pie in the sky concepts rather than follow through with the major issues that are most important to the majority of residents within Johns Creek. At the last meeting they bumped the Police Chief and Public Safety for Gateway Markers. Think about that!

“Be the Exception”-how long before we get rid of that slogan and adopt a new one:

Same as Everyone Else

A government cannot define us. An artist will not define us. Gateway Markers will not define us. We do not need outsiders to come in and tell us who we are.

Government can identify us but it will never define us. The moment we let government define us is the moment we have lost who we are. We should be defining government instead.

The sooner the majority on this Council gets that concept, the better off we will all be.

And if you are waiting for the proposal from the CVB so that you can see what we are, then you are part of the problem.

This problem is NOT going away, unfortunately. Next year will have even more dollars to allocate. And as long as they get tax dollars, we will face this issue.

End the Hotel/Motel tax. It’s a minute amount of our budget. And it’s a waste of time and resources to continue to debate these issues.

If they are worth doing, then do them out of the General Budget, and be accountable.

Do that and we can be exceptional.

The very last thing we should want to see in the fall are Gateway Markers this City Council is compelled to approve because they are now to far down the road to say no.

You should have said no in the first place.

Johns Creek Residents Should NOT Vote This Fall…

Residents of Johns Creek should not vote in this upcoming election if they are not familiar with the candidates, the major issues in Johns Creek and are basing their decisions on such variables as :

  1. You are not familiar with the issues we are facing such as potential widening of our roads to overcome the ineffective traffic light system we have today
  2. You are unfamiliar with the negative impact higher density housing has on our roads, schools, and property values
  3. You are basing your decision on the endorsement of an elected official, who just wants to avoid having someone challenge them on issues before the City Council
  4. You saw more signs for the candidate that you are going to vote for so you believe that is a sign of more support for that candidate(Signs for candidates are placed on the roads by the candidates and their crews-Signs in neighborhoods actually show you who your neighbors support but you still need to educate yourself!!!)
  5. You read their mailers to your home and they seem like a nice person

Residents of Johns Creek should vote IF:

  1. They have done their own research into the candidates
  2. They have watched the debates, forums, City Council Meetings and Work Sessions and see how these candidates actually think and function
  3. They understand that Johns Creek is at a crossroads.  Do we become Buckhead or stay Johns Creek.

Continue reading


The Property Tax Model is Broken Beyond Repair

Let’s be honest. The system of collecting taxes for county, city, and school taxes is broken. And the larger the area dependent on funding from property taxes, the more broken it becomes. North Fulton County residents pay tremendously more for the same county services than South Fulton residents.  Why?

Here are three reasons it needs to be scrapped:

  1. There is no correlation between the amount of taxes you pay and the amount of “services” you receive.

A family of six living in a $500,000 home and a family of two living in a $500,000 home, pay the same property taxes if they live in the same community.  Why?  What makes us feel its fair to collect three times as much tax on a per capita basis from one family than another?  What if the family of two lives in a home worth one million?  What makes it right to collect six times as much for the very same levels of services?  Should I mention that the family of six likely creates more demand for services than the family of two as well?

When property values are high, and tax rates are high, this can have the effect of driving out empty nester residents to avoid the high levels of taxes relative to the services they receive for those tax dollars.

2.  Property values rising(and falling) should have no impact on how much tax revenue is needed to run your county, cities, and schools.

We’ve seen property values fall during recessions and rise during better times.  This should have nothing to do with how many dollars are needed to provide services in your community.  Yet we have made the tax digest the first step in the taxation process, followed by each government agency voting on the millage rate to be applied to that tax digest.  Elected officials vote far more often on how much they will tax you than you have a chance to vote on whether or not they should remain in office.

Let’s add to that the huge infrastructure we now have in place at the Tax Assessor’s office to track every piece of property, every structure, and every improvement you make to your home, all in the effort to make sure every $ of real estate(real or imagined) is taxed.

Why on earth should you owe the government more dollars because you decided to finish your basement or add a deck?

The perverseness of this likely discourages residents from making improvements to their properties.

How much time and energy is used by the Tax Assessor’s office to gather all of this information?  How accurate is it?  Is it worth it?  Who is really benefitting?

3.  How many hours of effort will the Public spend appealing these assessments?

If 1/4 of the households in Johns Creek appeal, that could be as high as 7,000 homes.  Spend five hours on this process, and cumulatively we will have spent 35,000 hours fighting our high assessments.

Instead, why don’t we take a moment and consider a different system?  We do not tax each resident within an HOA a variable amount do we?  It’s a flat rate per household.  While not necessarily the same on a per capita basis, it is a fairer system than taxing each household based upon the value of their property.

What would a fixed property tax collected per residence look like?  First, it would treat all of us as equally as possible.

We would not need an army of government employees tracking our properties, needing to know everything about the inside and outside of our homes.

We would never have to appeal property taxes in the future.

Our governments would be accountable to us directly for the rate of taxation we face, and there would be no finger-pointing as to who is to blame.

The current system of taxation has more expensive property owners subsidizing the less expensive property owners.  In a society where wealth redistribution is frowned upon by most of us, it is curious to me why we are so willing to allow tax redistribution with property taxes, where the level of services received are so far removed from what the property owner pays in taxes.

Johns Creek could lead the way to a better model of taxation for its residents.  It’s time we slay the beast that taxation based on property values has become.   Taxation should not be unfair or onerous.

It’s time for a change.  Contact your locally elected officials and tell them you want a different system.  Tell them you want a better, more equitable system.