A healthy skepticism of government statistics is one of those self-preservation mechanisms that keeps us from hurting ourselves. Misleading official statistics too often lead people and businesses to act contrary to their own best interests and plan for scenarios that never happen.
We have always questioned what the government gives us; it’s not only a self-preservation mechanism, it’s part of our patriotic duty in the democratic system.
Take these two charts, presented by Robin Harding over at the Financial Times Money Supply blog. One is of the U.S.’s real GDP in dollars, and one is of the percent change of real GDP. The green bars are the government’s GDP estimates in June 2010, the blue are estimates from a year later in June 2011, and the red are the most recent estimates, from July 29, 2011.
What the charts are screaming is that the government has a consistent tendency to overinflate GDP numbers, and that the United States never really emerged from recession.
Take the second quarter of 2009—which has been continuously revised lower to the tune of a quarter trillion dollars. That's enough to pay the annual median income ($52,000) for 4.8 million U.S. families—no small error. The percentage change chart shows something starker—a consistent fall of GDP since early 2010
The government doesn’t want you to see these because they don’t want you to know that they have quietly erased trillions of dollars of GDP over the years as they revise their estimates. This wouldn’t be a huge sin if the errors were honestly reported and were distributed above and below reported figures. Problematically, the government has consistently raised GDP, only to quietly slip in their revisions, months, or even years later.
What these two charts reveal is the bigger government strategy for combatting recession—to lie. A careerist would call it the U.S. government “fake it ’till you make it” strategy. Unfortunately, despite a pack of statistical lies, the U.S. economy is still in the midst of a sharp contraction—something that can’t be papered over with statistical lies.