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“Durable goods” propaganda clumsy – at best

Regular readers will be familiar with my relentless attacks on the U.S. propaganda machine. This personal campaign is a response to the massive quantity of this propaganda, its absurd transparency, and the continued inability (or unwillingness) of the “sheep” to look past this veil of propaganda to see what is really going on in the U.S. economy.

A classic example of such inept deception comes from CNN's attempt to brainwash market lemmings with the latest U.S. “durable goods” report for April: “Durable Goods see biggest gain in 16 months”. Sounds good, doesn't it?

Lets start with a general observation. With virtually every U.S. economic “statistic” (every month), the preliminary “estimates” are revised to worse numbers with subsequent readings – generally MUCH worse. We can see that in this example, when CNN refers to previous months of the durable goods report – with every reading revised lower.

First, the “headline” number for March was revised from a decline of 0.8% to a decline of 2.1% - more than twice as bad. “Non-defense capital goods orders excluding aircraft” (which CNN describes as “a closely watched proxy for business spending”) was initially reported as having risen by 0.4% in March, but was “revised” to a decline of 1.4%!

These are not simple inaccuracies, made in “good faith”, they are obvious lies. The propagandists know that it is the preliminary estimates which always command the most attention – since they are the ones who dictate the level of coverage. So, the “game” is to publish an obvious lie with the “preliminary estimate”, and then quietly revise it to a much worse number, which they know will be completely ignored by most market participants.

This is not the end of the deceit, however. With the U.S. economy clearly having entered a Greater Depression, even with gross exaggerations, most of the data is still so horrible that the propagandists engage in selectively presenting the most favorable bits of these reports – while attempting to “sweep under the carpet” numbers which look terrible despite this falsification.

Generally speaking, market “experts” will tell you that the all-inclusive durable goods number (the “headline” number used by CNN in this article) is not the most relevant number to markets. The more-widely used measurement is the total durable goods measurement minus the transportation component. This is because transportation spending is not highly correlated with business activity.

Therefore, sophisticated market participants prefer the “ex-transportati... number. In April, even with the given exaggeration of this preliminary number, the reading was a weak gain of 0.8% in April – half as large as the less-important number trumpeted in CNN's headline. When this number is inevitably revised downward next month, expect the real reading to be a negative number. Thus, CNN's headline of the “biggest gain in 16 months” has absolutely no substance to it.

Finally, referring once again to “non-defense capital goods orders excluding aircraft”, (identified by CNN, itself as a more important measurement than the number on which they focused their propaganda) this statistic fell 1.5% in April. Again, as a preliminary estimate, we can be sure that this number will be revised even lower than this terrible number.

Thus, in any objective analysis of this data, the durable goods numbers released by the U.S. government this week showed extreme weakness in the U.S. economy – with the guarantee that these same numbers will look worse still when revised next month.

This same, clumsy “game” takes place every month, with every U.S. “statistic”. Indeed, the huge “rally” which has occurred in U.S. equity markets over the last two months is built entirely on top of this propaganda – which “Helicopter” Ben then refers to as “green shoots”.

To describe the rancid decay of the U.S. economy as the “green shoots” of a “recovery” goes beyond Orwellian brainwashing. Instead, this is much more like Alice's trip “through the looking-glass”. And just as Alice discovered in her own journey, none of the residents of “Wonderland” even realize they are living in a fantasy-world.