Biderman’s Daily Edge 4/16/2012: Ignorance is Bliss Regarding Economic Data



Ignorance is bliss, particularly when it comes to US government economic data. The latest bad joke occurred this morning when the US Census Bureau said retail sales rose 0.8% in March.


And the financial press reported that 0.8% sales increase as gospel showing once again how totally ignorant the media is when it comes to reporting economic numbers put out by the US government. The AP headline was that US retail sales in March rose 0.8%, helped by job gains. The Wall Street Journal online site reported not only that U.S. retail sales rose 0.8% in March, but also that Americans spent more on autos.


Really? This is garbage reporting of the worst sort. Why? Well first let us look at the actual Census Bureau press release, which is entitled Advanced Monthly Sales for Retail and Food Services March 2012. Lower down the press release explains that the advance estimates are based on a subsample of the Census Bureau’s full retail and food services sample.


What is a subsample? Would you believe in this broadband world that what is reported as a hard fact by the financial media morons, is based upon a mailed, snail mail, survey to 5,000 retailers and the mailed back response?


Let’s see, the US Census Bureau mails surveys to a mere 5,000 retailers and from the responses mailed back guesses at the fraction of a percent change in month to month retail activity. Wow! One would think that the Census people never heard of credit, debit and cash cards. Actual cash is much less than 10% of sales these days and I would rather have all the credit and debit card data than a survey of 5,000 outfits, wouldn’t you? Believe it or not, Master Card and Visa sell their data to the public and I am sure all would give summary data to the government, if asked.


But no, the US government agencies, which also include the Bureau of Labor Statistics and the Bureau of Economic Analysis, in their infinite wisdom ignore available real time data. And what is even more unbelievable is that no one in the financial media – except us that I am aware of – is saying that this data is a bad joke!


The Wall Street Journal online today reported that March retail sales were up in part due to car sales. Car sales? March car sales were reported to be running at just over 14 million annualized, down around 6% from a February sales rate of 15 million. Yet the advanced census bureau estimate showed auto sales rose 1.1% in March? One would think that someone would have said, wait a second, how can the actual new car sales rate be down while the Census Bureau is reporting higher revenues from new vehicle sales?


My solution is very simple. Fire all the government economists and disband the BLS, BEA and Census Bureau. Instead hire me and give me enough clout to get real time data from master card, visa and all the plastic folk and I tell you what the consumer is doing in real time. Also if I was allowed to mine the withheld income and employment taxes sent daily to the US Treasury I could tell you how many people are working and how much they are making in real time.


But no, the government reports garbage and the morons in the financial media report that garbage as hard facts! The fault is not really with the reporters. Rather it is their editors who are to blame.


The globe is in a real time mess. Global trading is in real time. Yet, the financial markets trade in real time data on the US economy that is based upon surveys and guesses. Am I missing something, or is this just plain nuts?


Charles Biderman
President & CEO TrimTabs Investment Research
Portfolio Manager, TrimTabs Float Shrink ETF (TTFS)



13 Responses to Biderman’s Daily Edge 4/16/2012: Ignorance is Bliss Regarding Economic Data

  1. Katie on April 17, 2012 at 12:36 am

    Thank you Mr. Biderman for telling the truth.

    What is happening is that the BLS is under EXTREME pressure to produce “rosy numbers”, in fact any “rosy numbers” at all, in order to provide justification for why the economy is experiencing a tremendous “recovery” during the first quarter of 2012. These “rosy numbers” provides the cover story for why the markets have had their best first quarter in over 3 decades.

    So the BLS and bean counters are simply making it up because that’s what is being asked of them, and no they don’t need no stinking real time data because otherwise they would be forced to report data that tells the real story.

    I am surprised that Apple’s share price finally is down over 4%, that the Fed let NASDAQ slip today.

    The markets continued rise upward are really an inverse reflection of the real economy: continued job losses, lower wages, higher inflation, little job growth, continued huge outlays for over the top military spending, continued intervention of the Fed and ECB to keep printing money to shoot liquidity into the markets and TBTF banks.

    At some point the financial media will be forced to listen to the truth and report what is really going on. Until that time happens, they are happy to keep going along with the blinders on everytime Bernanke speaks, hinting at more QE, saying the economy still is slowly recovering, etc.

  2. Sunil Mujumdar on April 17, 2012 at 1:28 am

    Maybe the cars sold in March were more expensive on average in March than Feb? So fewer cars, higher sales?

    Just trying to find a logical way both statements would be true

  3. Dave in Canada on April 17, 2012 at 3:59 am

    Thank you Charles for being a truth-teller during these manipulated times. There are 3 or 4 American websites which speak the truth, this is one of them. The future will be interesting to say the least. Hang on !!!

  4. Karl Smith on April 17, 2012 at 12:07 pm

    I understand that you are selling your product, which is fine.

    Obviously, however, the point of federally produced data is not to assist market participants in correctly pricing assets. It is to assist policy makers and researchers in understanding the US economy.

    To that end the crucial factor is that the data collection procedure is methodologically transparent and consistent, not that it represents “the most accurate guess.”

    You and anyone else are free to take the data and adjust it in any way you like to get a picture that you feel is more accurate. You can weight it with other series. You can collect your own series. You can create statistical indices. You can even apply your subjective judgement.

    However, it would be utterly destructive to ask the government to do this on an ad hoc basis, as it would then disrupt everyone else’s personalized adjustment of the data.

    • John H on April 18, 2012 at 12:27 am

      “disrupt everyone else’s personalized adjustment” ?


      Instead of sending out surveys mailed to 5,000 retailers via USPS over 3 months ago, why not simply throw darts at some numbers? Not much difference. The whole exercise is designed to paint a picture of the economy that is completely different than what is going on in the “real economy” where the middle class is shrinking, those who are unemployed grow, working wages are reduced and inflation grows faster than 3%.

      Someday what goes up must come down, and when 3 plus 3 no longer equals 60, it will finally equal just 6, as with the jobs reports, consumer buying, etc.

      The economy has been in the dumps since 2008 and isn’t growing at all, especially when major corporations continue to reduce headcounts and offshore jobs and replace jobs whenever possible with automated computers and reduce salaries and wages and healthcare keeps going up, and inflation is higher than stated. Let’s call a spade a spade. ok?

    • Friedman's Ghost on April 18, 2012 at 1:20 pm

      Interesting comments Karl and to some degree they are relavant. However, if government data is simply to aid in policy cretation then it most certainly should be as accurate as possible. More and more people are beginning to see the sham that government reporting has become and in time it will be rendered irrelevant.

      • Karl Smith on April 18, 2012 at 4:44 pm

        No – this is just bad Philosophy of Science

        It should be as *consistent* possible, not accurate.

        To give you an extreme example, suppose that you knew that the Census data always overstated spending by exactly 3.02% per year.

        Then this data is just as useful to you as data that reported the actual number.

        Indeed, neither a computer nor a well trained human would notice the difference. They would just rename the government series “Spending + 3.02%” and proceed on as if nothing happened.

        That a really surface example. We can go deeper into the meaning of data, knowledge, extrapolation, etc if you want, but the key message is that the “truth” whatever that might be is not what you want from data. What you want is a consistent and hopefully precise measure.

        Now, if some folks want to argue that the methodology is imprecise that is another issue. For example, if you have a source that can reduce the error bands on the same series and you can show that I would be interested.

        However, simply going around monkeying with the data for poorly thought out reasons is not a good idea.

        • Johnson on April 21, 2012 at 3:12 pm

          Whilst consistency is important, precision is not. However, but I must insist that accuracy is too…
          A key characteristic of deviation is that it should be both negative and positive so that what we are measuring is central tendency. A deviation to one side suggests bias.
          Back to the real world… The US Gov. is fudging numbers! The reason is political in nature!

        • The Layman on April 21, 2012 at 4:22 pm

          Karl, I think the entire point of his article is that it can’t be consistent (like x+3.02%) because of the methodology. Not only that, but he offered a more accurate source – numbers from credit card companies. Did you fully read this article before commenting?

          Did you really just say that you don’t want “truth” from data, but consistent and precise measurement? Aren’t these one and the same? Isn’t the truth going to be the precise measurement of reality? Of course, one could make the scientific argument that the data doesn’t show the truth. Only logic can make sense of the data to show the truth. However, you, sir, are making a radically different, and logically ridiculous, argument.

  5. John on April 17, 2012 at 5:53 pm

    Auto sales as reported by auto makers include fleet sales. There was a large proportion of fleet sales in February, which decreased in March. Thus, it is not surprising that *retail* sales of autos increased in March. Furthermore, the government data reports dollar sales, whereas the industry figures just report unit numbers. There are a number of factors which could result in larger dollar amounts being spent even though unit sales went down (fewer incentives, larger price tags, etc.)

  6. jim on April 17, 2012 at 6:08 pm

    Clearly you are just plain nuts, Charles.
    Don’t feel bad,however, you have lots of company. This market is completely retarded. It bears no resemblence to an actual “free market” economy. We are all being told to gamble with our money because the government will save us if anything goes wrong. Problem is there isn’t enough money in the world to paper over the problems we are now creating. I need a beer. Next time you are in Santa Rosa, I will buy you one if you like. It might make you feel better for a while anyway:)

  7. James Holdam on April 18, 2012 at 1:49 am

    Alas, “spin” for the various ‘select’ economic data serves the “well intended” purpose to improve “SENTIMENT” towards the economy. I say “well intended” because people need uplifted feelings to spend (to help fight a possible steep downturn).

  8. Ed_B on April 20, 2012 at 6:12 am

    “It should be as *consistent* possible, not accurate.”

    I’m sure that this makes wonderful sense to anyone who lives their lives on theoretical paper but to those of us who must live in the REAL world, consistent information that has no relationship to reality seems a very poor place upon which to base public, or any other kind of national policy decisions. After all, at one time the consistent consensus was that the world was flat. Unfortunately for those who thought that, it neither made the world flat nor allowed people to do anything useful with that knowledge. Consistency then can be seen as necessary but not sufficient. Accuracy of the information is an absolute must. As in many cases, the best combination of these two would very likely produce actionable information that could be used to create policies that would actually be successful in the real world. I understand that this is not necessarily vital to policy wonks but it absolutely is vital for success at any endeavor which must achieve useful results instead of reams and reams of additional useless drivel.

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Charles BidermanCharles Biderman is the Chairman of TrimTabs Investment Research and Portfolio Manager of the TrimTabs Float Shrink ETF (TTFS)

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