These economic numbers are… fake?

So, uh, are we in a recession yet? Because everyone's like, uh, you know, we're in a recession, right? You know, we're in a recession, right? Always a GDP quarterly growth increase year-over-year, this last quarterly report. So, technically, no. But let's let's find out cuz everyone always says we're in a recession.

Late last week, President Trump fired the head of the Bureau of Labor Statistics after they released their quarterly jobs report. The BLS, which is primarily responsible for collecting a Yeah, that was wild. presenting job market data presented a report that was less than flattering about the current state of the economy for average workers. In response, the president the revisions were wild. Listen, he I I'm sure Trump is more upset about the revisions. The revisions cut hundreds of thousands in previous months job increases. So, but it was pretty crazy to that was a wild day. Claimed that he had issues with the economic numbers for a long time and that he believed the recent report was phony.

Now, hot take alert, but he is most likely absolutely right, just not in the way that he thinks. The July report estimated that the economy had added an extra 73,000 jobs, which was already below expectations. But the real news was that when the BLS ran the numbers again, they realized that they had overestimated May's job creation by 120. And that's the crazy thing because the revision was just huge. But you know what's crazy? Highest laid off sector this year so far, federal government. So that counts towards at least unemployment, right? 5,000 and June's by 133,000. That means that more than a quarter of a million jobs that we thought existed never did. And that was just over 2 months. Wild.

These major readjustments have cast some doubts over the already disappointing numbers from this month. And for many people, it's reconfirmed what they were already thinking. The economy is a lot worse than the numbers are telling us. The latest jobs report was far worse than expected. President Trump accused the bureau's commissioner of rigging the numbers to make himself and fellow Republicans look bad.

Quick little detour real quick. This is pretty crazy. Someone in chat just called this up. In Austin, looks like a mass shooting happened. Three killed, one hurt in North Austin shooting. Suspect detained. Three people died, one other are hurt after a shooting at a target in North Austin Monday. According to a news flash sent out Austin City Council and the mayor obtained by KXAN Austin police said suspect is detained. This is the crazy thing. Our old office was like right here where this was right next to our old office. I we used to go to this Target to get things. We used to go to this Target to get things for the office and for the sets and it's pretty crazy shooting at the Target just before 3. It's 4 here. So this is about an hour ago. Described as a white male. Well, it was probably the guy from the video we just did. Khaki shorts. Definitely the guy from the previous video we just did. Is the dude dead? Oh, suspect is detained. Wow. Well, I guess I won't be commuting this way. Jeez. And this is why we got security to go at our place. The world's [ __ ] crazy. But this is right next to our old office and we used to go there all the time.

Millions of qualified workers hitting the streets every day searching for jobs but getting rejected. I got rejected by Taco Bell and Sam's Club. A lot of people don't understand why though. Can we talk about why people are rejected from those jobs and feel like it's crazy that they're rejected from those jobs? It's because you're likely uh skills are matched for a different job, a more career oriented job. Let's just say your degree is curated towards something completely different. And even your previous role that you were laid off in is in a completely different sector. So those jobs like McDonald's thinks you're going to come in and you're going to leave in a month or a month and a half when you go get the job you're clearly trying to get instead. So it's not an overqualification. It's the fact that they're going to hire you and you're about to be gone. So why are they hiring you? That's often times where they see that and then people are people are like why am I not getting hired by even those jobs? It's usually that. Yeah. The resume just has to be curated. Exactly. You essentially have to resume lie like downgrade yourself.

Making economic policy or business decisions without reliable data is like trying to fly a plane without reliable instruments. It's just not going to work. By their own admission, the Bureau of Labor Statistics and other government agencies in charge of collecting data have produced less reliable numbers over recent years, and it's only getting worse. A week before releasing the controversial jobs report, the bureau made another press release talking about major compromises they were making in the collection of consumer prices. This data is used to make the consumer price index, which is what they use to measure inflation. So, it's kind of important. Even this people find quite controversial. People debate whether or not it's a valid source of calculating inflation or not. To make matters worse, everybody from politicians to venture cap, nobody views McDonald's as a long-term career path. Absolutely. But McDonald's would rather hire someone that at least looks like they're going to stay for 6 months versus a month and a half. You know, if you're clearly showing that you're trying to get a different job and you're just accepting that job, if you are basically telling them on a sheet of paper that you're leaving the moment you get the job that you're actually looking for, why would they hire you? Have started jumping in to provide solutions to a problem they really don't understand. But there are three big reasons why these compromises are being made in the first place. and three reasons why it's probably only going to get worse. The first reason is that markets are changing faster than ever and traditional agencies are struggling to keep up with new economic realities. For example, the jobs report that is suddenly stirring up so much controversy is really two different surveys. The establishment survey and the household survey. The establishment survey is what was getting so much attention and it works by a lot of small businesses do not report or they report very late. asking thousands of businesses and government agencies how many people they have on their payroll for that month. Now, these surveyed businesses supposedly include small, medium, and large employers. But this already presents some challenges. Large employers are more likely to have dedicated human resource departments that can respond to these surveys as part we finally got our first HR part of their full-time job, whereas small businesses on average aren't as timely if they bother doing it at all. Yeah, the actual survey only takes about 20 minutes and for a lot of larger companies it's built. Okay, even 20 minutes honestly is like too too long to ask cuz it's not actually benefiting these businesses in any way to do it automatically to their payroll software. But for a small business owner already putting in long weeks, a 20-minut survey on payroll statistics often isn't the best use of their time. Even if they do respond to this completely optional survey, it's usually not until after the report has already been published. According to the bureau themselves, they have been publishing recent reports with as little as 55% of the total eventual collected data, and it's only getting worse every year.

To account for this difference, the BLS uses imputed data, which is just a nice way of saying guessing based on previous results. If they are still waiting on lots of small businesses to provide their data, they will look at what small businesses have said in the past compared to large businesses. Okay, so it's uh [ __ ] educated [ __ ] that have already provided the responses and use that to make their report. As any good finance bro will tell you, past performance is always the best predictor of future results. Now hopefully you all know I am joking. But this system is normally good enough for most months. But the times where the strategy really suffers is during periods of rapid change. Small businesses feel Yeah, cuz you can't use the results that were happening the last 5 years when economic conditions are changing. Yeah, that wouldn't make any sense. the impacts of bad economic conditions faster and are normally the first to either let go of staff or go out of business completely. So if reports are only using data from big businesses and then guesstimating the rest, then they won't notice these job losses until they have to go back and do revisions like what is happening right now.

Now this has been the case since the survey was first conducted. Not to sound too alarmist, but these massive downward revisions were last consistently seen during the run-up to the global financial crisis. But what's we're not surprised because typically historically what do we see after long periods of higher interest rates and recession changing now is that smaller businesses are just responding less overall and there are a lot more of them. The rate of new business creation has increased massively since the pandemic. In the past, these were normally real businesses that had a good chance of creating real jobs for real people. And we are still imputing economic data based on that old assumption when really what most of these new businesses actually represent is people registering for the Someone tell Caleb about the Austin shooting. Yeah, we just we just covered it. Pretty crazy. Really sad. Side hustle as an Uber driver in the gig economy. This not only goes a long way to explaining declining survey response rates because your average person driving Uber isn't going to fill out a BLS survey, but it also creates two bigger problems. The first is that it overestimates real job creation based on outdated assumptions. And the second is that even if this data was accurate, it doesn't capture a more pressing reality. I mean, Trump probably should have just uh advocated uh gone uh should have uh uh advocated for the change of how the data was collected specifically would probably have been the more effective way. We could create a million new jobs next month and it won't do you much good if you are working three of them and still can't afford to make ends meet. Yeah. And so far, all of this is just one report. There are dozens of agencies across America and the rest of the world that are failing to properly account for changing financial realities. So, it's time to learn how money works to find out if we can trust our economic data and what it means if we can't. This week's video was made possible by us and our new Spotify page. If you would prefer to listen to the to producing data on how the country in the economy is doing, the Bureau of Labor Statistics is the one cog in the machine that is making headlines at the moment. But other agencies like the Census Bureau, the Treasury, the Bureau of Economic Analysis, the International I don't know. Census Bureau's getting some news too. trade commission, the Department of Agriculture, as well as the data collecting branches of the IRS and the Fed all rely on each other to produce reliable numbers that they themselves put into their own calculations. For example, when the Bureau of Economic Analysis produces GDP data, about 70% of that is based on consumer data collected by the Census Bureau in their retail trade surveys. Inter agency data sharing, as this is known, is not a result of laziness, but rather a feature of the system so that every department is overlooking every other department. But you can probably start to see the problems. Uncertainty in any part of the system creates uncertainty in the entire do we ever trust economic data? It's it's hard. It's hard. But we have nothing else to go off of. Obviously flawed collection system for sure. The the only good thing is when if it is flawed, but if it's consistently flawed the exact same way, we can at least spot trends, right? Like that's and that can be really useful for certain groups.

The first are politicians who get to cast out on numbers that might make them look bad, but let's be honest, they never let numbers get in the way of a good spin anyway. The second group are large investment firms with access to their own proprietary data collection techniques. A report from a data firm published by Newswire estimated that investment management firms could spend as much as 15.4 billion this year on alternative data, which which is fair and honestly the private sector is probably more effective at actually collecting the data. really just means anything not published publicly by government agencies or the media. That is 20 times the annual budget of a department like the Bureau of Labor Statistics. These firms are regularly employing tactics like using private satellite imagery or just running their own surveys where they will actually pay participants for more timely responses. The better their data is compared. Yeah, small businesses need an incentive to take the time out to actually complete these surveys when we're just relying off of predictions to the publicly available data released by government agencies. the more they can make on that data asymmetry. Now, you might think this sounds a little bit like insider trading, but it's not. Technically, the information they are collecting is out there for anybody to collect, and it's not their fault if the average goober on Robin Hood doesn't have access to a fleet of spy satellites to collect it. This creates the second major problem with our economic data. It's more profitable to privatize the numbers.

The BLS, for example, has 10% fewer staff and a 15% lower budget than it did in 2010 following the global financial crisis after accounting for inflation. Now, that doesn't sound terrible, but the scope of its operation has also grown considerably in that time, making its job a lot harder overall. The fewer resources they have to actually go and collect primary data, the more they have to rely on guesstimations based on historical correlations. An article, ironically, published by Bloomberg last week, reported that the agency would no longer be collecting consumer prices from certain rural regions due to budget constraints. Okay, well that's foxed. According to the report, the volume of data they are effectively making up has more than tripled in the last 6 months alone. The reason this is so ironic is because Bloomberg is one of the biggest data retailers in the world. Every one of those black and orange screens filled with random spreadsheets and stock charts you see in videos. People pay a [ __ ] ton of money for that. on trading floors is a Bloomberg terminal. Each one of those computers costs about $30,000 a year in an ongoing subscription. And the reason that big investment firms pay that much is because it gives their staff access to information that just isn't available to regular people. Anyway, budget cuts can create a vicious but convenient cycle for these parties. These departments have their budgets cut, so they don't have as many resources to collect reliable reports. These unreliable reports with big adjustments are then used to show how pointless these departments are, so they get their budget cut even more. The average voter doesn't really understand what these people do. The average politician doesn't like having their work critiqued, and the average industry group would love it if they had a monopoly on good, reliable data. And that's the third major problem that's quickly getting much worse.

Even if these numbers were absolutely flawless, are they even relevant anymore? There are lies. Damn lies. And then there are statistics. It's a quote so old that nobody even knows who originally came up with it anymore, but it's remained relevant for hundreds of years. A survey that I ran on all of you while I was putting this video together found that Damn, that's aggressive. Most people really in his audience that believe in any of the data we're getting. That's wild. Overwhelming majority did not think that current economic statistics were an accurate reflection of the real economy. Most people who are paying any attention to these numbers while still living in the real world inherently understand this. The idea that what is causing this disconnect is a secretive group of statistitians plotting away behind the scenes to make politicians look bad is frankly pretty dumb. But there is actually an element of truth in it. A report by Cambridge University found that as we have become more politically polarized and less likely to answer surveys, only the most partisan among us actually bother responding to be counted in the data. A business owner who supports a party currently in power is much less likely to like I'll be honest, we've been in business for 3 years. I don't know if we've ever responded to the survey. to respond to a survey with negative economic implications, and they are much more likely to respond if they have good news to share, like having hired new staff. It's less exciting than a shadowy conspiracy, but it is still a problem. Unfortunately, it also just distracts from the bigger problem. A lot of attention is being paid to the referees to see if they are keeping an accurate score. But nobody has stopped to ask why they are monitoring a jousting league. A lot of the data they collect is completely outdated in today's economic landscape. For example, the conditions to count as unemployed are pretty strict and it doesn't account for a growing number of people who are underemployed or have simply given up on looking for a job. Yeah, we need a new data set for that altogether. Another absolutely horrible metric we have learned to think is really important is GDP per capita. A smaller channel by the name of Type Ashton did an amazing deep dive into the stupidity of this data point. So instead of ranting about it here, I will leave a link to it down below and I'll leave a link to this video below. The point is, long data series are good for assessing performance in comparison to the guy that came before, but they aren't always the best indication of how things are actually going right now. If this goes on for long enough, people will just stop caring. In fact, they kind of already have. 10 million working age men. Yeah. No [ __ ] I mean, people just care about their day-to-day lives, what they're seeing in their communities, what they're seeing in their families. a a statistic isn't going to be able to tell them, "No, your life is actually better than it is or your life is actually worse than it is." I mean, people just see what's in front of them. You know, then we get fed information all day from social media. Listen, if you're doom scrolling on Tik Tok, doom scrolling on Twitter, you're going to think the world and the economy and everyone's lives are worse than they are. If you're doom scrolling on Instagram, you're going to think everyone's doing a lot better than you and you're the one falling behind. If you're just watching the local news, you'd think if you step outside, you're going to get a shot. So I don't know a lot of it is just what you're experiencing in your own life have completely dropped out of the workforce which is yet another example of a trend which is not captured with this data. Go and watch this video to find out why this is happening and how they are surviving without an income. And don't forget to like and subscribe to keep on learning how money works. Good video.

Are we in a recession? I would say no just from the more closer to technical definition of GDP decline. uh even though they're not the official numbers because that usually comes out at the end of the quarter. What we have seen so far is that we did have a year-over-year GDP growth and it was higher than most people thought at the last quarterly report. So, no from a technical standpoint, but we'll see as that number is actually not official and usually gets revised anyway. So, we'll see. I'd guess no, but it certainly could be on the horizon based on just typical when interest rates are as high as they are. uh historical standards. Of course, the interest rates aren't like historically high, but compared to at least what the norm has been the last 20 years, yeah, they're a bit high. And typically, that is followed with some kind of recession. And just like uh this Mr. Man said, last time we had revisions for the job numbers, new job, new employment and unemployment numbers go in as aggressive as this was followed by the financial crisis. So maybe a recession is coming. But I guess that all gives us all an opportunity to buy when the market goes down.