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Leithner Letter No. 96-98
26 December 2007 - 26 February 2008

There’s a pattern of falsifying statistics throughout the entire [U.S.] Census Bureau. And anyone who attempts to blow the whistle on the fraud is either retaliated against or ignored, according to two new sources who have experienced the process firsthand. In [one] instance, a data collector … was faking reports that went into the nation’s all-important jobless tally and consumer-inflation survey. … [These reports] alone would have given inaccurate readings on the economic health of 500,000 families.

Now others who work at Census in different areas of the country are stepping forward to tell me similar stories about data being changed at the whim of supervisors who are more concerned about making quotas than protecting the integrity of information that is used for everything from cost-of-living adjustments for Social Security recipients to monetary policy decisions by the Federal Reserve and business plans by companies in the US.“I can tell you that waste, falsification and fraud are rampant,” says one of my new sources, who works as a Census supervisor in the Midwest and handles a number of surveys, including those on jobs, health and crime.  When this source complained, higher-ups “told me to shut my mouth.” When that didn’t happen, the source was deprived of work.

The data fabrication takes a number of forms. My Midwest source says it is not unusual in that region for 800 out of roughly 2,000 interviews for the Current Population Survey (which is used to get the unemployment rate) to be incomplete, called “refusals,” on the last day of the monthly collection period. Then, magically, only 100 will be unfinished when results are turned in next day to headquarters, which surveys for the Labor Department. “It’s statistically impossible,” my source says, “to complete the number of refusals we have in the last few hours.” So supervisors are either filling out the surveys themselves or lying that houses are vacant – which also counts as a completed survey. Either way, any kind of falsification would obviously give a misrepresentation as to whether people in the household have a job.

And in an obvious conflict of interest, the wives of two of the supervisors in this Midwest region, according to my source, have been hired to check the results. Up to 25 percent of the thousands of surveys that go into the jobless report may be fake, this source estimates. …

John Crudele, Fraud Runs Rampant in Census Bureau
The New York Post (21 April 2014)

The [Bureau of Labor Statistics], via exploiting hedonic adjusting, can transform a [petrol] price increase to a price decrease by quantifying and incalculable benefit. Yes, it really is that absurd. Milk futures hit an all-time high of $24.29/100lbs yesterday. Food prices are at or near all-time highs. We are comforted that the Fed believes that inflation is too low.

How will this all end? … Last decade, double-digit housing inflation for years was concealed by using … hedonic adjusting and other deceitful CPI methodologies [to mitigate] energy, healthcare and food inflation. This is recurring now. So it is reasonable to assume that Janet Yellen and her ideological soul mates in the Fed will foster another inflationary consumer bust and then plead ignorance after the fact. If the Fed allows inflation and stocks prices to increase significantly in coming months, stock prices will be near bubble levels as, or after, the economy has crested, à la 2008. When the inevitable bust appears, the Fed will have little recourse because it will not be able to cut rates sharply, like it did in 1987, 2001 and 2009 to halt those crises.

The King Report
(24 April 2014)

The Risk of a Mere Correction – Or of a Severe Bear Market?

“The Australian share market notched up a fresh near six-year high at [today’s] open,” reported Business Spectator (Aust Stocks Open at Near Six-Year High) on 24 April 2014. “The S&P-ASX200 now sits at its highest intraday level since the week of June 9, 2008, eclipsing the intraday high of 5,521 set yesterday.” Is this good news or a bad omen? According to Shane Oliver (The Risk of a Correction or New Bear Market in Shares? Oliver’s Insights, 23 January 2014),

while shares might see a brief 10-15% correction at some point this year, a new bear market is unlikely and as such returns should remain favourable through the year as a whole. … I have applied the definition that a cyclical bull market is a rising trend in shares that ends when shares have a 20% or more fall that takes more than 12 months to be reversed. A typical cyclical bull market since 1950 has seen shares rise 126% … and [lasts] four years. So far we are up 37% over 28 months. So history suggests more [upside of share prices] to go.

To read the entire Newsletter (PDF), click here.

Chris Leithner


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