All year, the market has been trading off of small differences between macro economic statistics and expectations.  One theme we’ve emphasized in 2022 is that government statistics do not represent reality; but rather, are generated by government employees to advance a specific narrative.  This happens under both Republican and Democratic administrations as no one wants to report bad numbers on their watch.  However, it’s been particularly important this year as 2022 was an election year where a change of control of both houses of Congress was a possibility, and the macro economic environment is getting more scrutiny than any time in my memory.

DKI has recently expressed skepticism regarding the recent employment numbers.  We questioned the official numbers here and have also done so in recent weekly “5 Things to Know this Week” pieces.

It turns out our skepticism was well founded.  Yesterday, ZeroHedge reported on this issue highlighting a public fight between this administration’s Bureau of Labor Statistics (BLS) and the Philadelphia Federal Reserve.  Small differences in reported numbers are common as different agencies use different methodologies and sources.  However, this discrepancy is notable both for the public nature of the disagreement between two agencies as well as the magnitude of the difference.  The Philly Fed is claiming that the BLS overstated employment by over 1MM jobs.

That’s enough to swing an election.  We’re not accusing anyone of malfeasance and we don’t have proof of who’s right or wrong.  The truth may lie in between the two reported numbers, or even outside the range.

Regardless, DKI is going to continue telling you that these official numbers were never intended to provide any real measure of truth, and that we will always look for ways to try to figure out some method to quantify how high/low the reported numbers are.  Through all of 2022, we’ve given you our revised estimates of both CPI and GDP that we believe are more accurate than any provided by official sources.  The good news is we’ve been able to use our calculations regarding whether the official statistics were too high or too low to make money for DKI subscribers.

DKI has speculated that the primary reason for the discrepancy in the employment numbers was double counting people who have multiple jobs.  We’ll keep you updated on this important topic.