The federal government\u2019s monthly releases of economic statistics \u2014 especially the inflation rate and growth as tracked by gross domestic product \u2014 have long occasioned partisan preening (or denunciation) and for a general public stock-taking of the health of the economy.<\/p>\n
Not this month. This time, they\u2019re the occasion for doubt and confusion.<\/p>\n
On Dec. 18, the Bureau of Labor Statistics reported that inflation had fallen to an annual rate of 2.7% in November,<\/a> down from 3% in September and well below the 3.1% consensus of economists. And on Tuesday, the Bureau of Economic Analysis reported that real gross domestic product had shot up by a surprising 4.3% annual rate in the third quarter of 2025 ended Sept. 30.<\/p>\n The numbers give you meaningful information about the system, but not about how people experience their actual lives.<\/p>\n \u2014 Zachary Karabell<\/p>\n Unsurprisingly, the Trump administration and its Republican acolytes seized on the figures to boast about Trump\u2019s economic policies. White House economic advisor Kevin Hassett proclaimed the inflation figure to be \u201can absolute blockbuster report.\u201d<\/a> He described the GDP figure as \u201ca great Christmas present for the American people.\u201d<\/p>\n \u201cAmerica is winning again,\u201d crowed House Speaker Mike Johnson<\/a> (R-La.) after the GDP report. He called it \u201cthe direct result of congressional Republicans and President Trump delivering policies that drive growth and expand opportunity for American families and workers.\u201d<\/p>\n Get the latest from Michael Hiltzik <\/p>\n Um, not so fast. <\/p>\n The economists whose jobs involve scrutinizing those statistics to glean what they really mean don\u2019t view them as unalloyed support for Trumponomics. Quite the contrary. Many see them as artifacts of the long government shutdown, which halted the collection of data that go into those reports, severely distorting the results. Furthermore, they expect the flaws in those reports to persist well into 2026, undermining their usefulness as true economic indicators. <\/p>\n \u201cYou\u2019ve got to take it with a grain of salt,\u201d<\/a> said Diane Swonk, chief economist at KPMG US, of the inflation report. \u201cIt\u2019s confusing and it doesn\u2019t quite square with prices that we\u2019ve observed.\u201d<\/p>\n A close examination of the GDP figures also underscores the narrow basis driving economic growth in recent months \u2014 it\u2019s essentially the product of robust spending by wealthy consumers and massive corporate investments in AI technology. For middle- and lower-income Americans, the economic present and future don\u2019t look anywhere as sunny as the numbers would suggest.<\/p>\n \u201cThe numbers give you meaningful information about the system, but not about how people experience their actual lives,\u201d says financial analyst and economic commentator Zachary Karabell, whose 2014 book \u201cThe Leading Indicators\u201d<\/a> injected some perspective on how we interpret economic statistics and explained why our faith in them is often misplaced.<\/p>\n Indeed, consumer confidence has been sinking for months,<\/a> according to the Conference Board. That points to an enduring question about the U.S. economy: Whose economy is it?<\/p>\n More than ever, it belongs to the rich, producing a \u201cK-shaped\u201d economy, which has been playing out in shopping patterns this holiday season, as my colleague Caroline Petrow-Cohen recently wrote.<\/a><\/p>\n According to Bank of America analysts,<\/a> since this spring, spending by the highest-earning third of Americans has been soaring, while that of middle- and lower-income households has stagnated. In part that\u2019s because the stock market has remained vibrant. <\/p>\n Since the top 20% of households as measured by income own about 87% of directly-held equities, stock market gains \u201ctend to disproportionately benefit the higher-income cohort,\u201d the BofA analysts noted. By contrast, \u201calmost 30% of lower-income households appear to be living \u2018paycheck to paycheck.\u2019\u201d <\/p>\n The highest-earning 10% of households now account for nearly half of all consumer spending, according to Moody\u2019s Analytics.<\/a> That\u2019s the highest level since the data began to be collected in the 1980s, when the rich accounted for only about one-third of spending.<\/p>\n Job growth may already have turned negative, even if the published employment figures don\u2019t yet show it, Federal Reserve Chairman Jerome Powell acknowledged during a Dec. 10 news conference<\/a> following the Fed\u2019s decision to lower interest rates by 0.25 percentage points. <\/p>\n Non-farm payroll gains have averaged about 40,000 a month since April, Powell observed. \u201cWe think there\u2019s an overstatement in these numbers by about 60,000,\u201d he said. \u201cSo that would be negative 20,000 per month.\u201d <\/p>\n The divergence between the gross economic statistics and the lived experience of Americans is nothing new. It was remarked on by Robert F. Kennedy Sr. in a speech in March 1968,<\/a> less than three months before his nascent presidential campaign was ended by an assassin\u2019s bullet.<\/p>\n \u201cGross national product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage,\u201d he observed. \u201cIt counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. … Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. … It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.\u201d<\/p>\n That brings us to the specific flaws in the latest statistics. <\/p>\n The government shutdown, which lasted 43 days from Oct. 1 to Nov. 12, was the most important cause of gaps in the collected data for the consumer price index calculation. As Swonk noted in a social media post,<\/a> cutbacks at the BLS had already reduced the staff assigned to sampling prices by 25%. That prompted the agency to substitute \u201cimputed\u201d numbers for hard data. <\/p>\n \u201cThose cases can show up as zeros in the percent change of the release,\u201d Swonk wrote \u2014 obviously lowering the bottom-line figure. A sampling scheduled for mid-October had to be canceled, so figures dating from August were used instead \u2014 concealing any price increases in subsequent months. <\/p>\n A major problem concerns housing costs, which account for about one-third of the data inputs for the CPI. Because the BLS was unable to collect rental data for October, it implied that the monthly change in rents was 0% in October \u2014 further skewing the reported CPI lower. Experts say it will take at least six months to use newly collected data to provide a reliable estimate of housing inflation. <\/p>\n The delay in sampling, Swonk adds, means that some seasonal price phenomena were missed. She points specifically to airfares \u2014 the originally scheduled sampling would have incorporated a pre-Thanksgiving run-up in fares, but by the time the data were collected fares had returned to a non-holiday level.<\/p>\n Inflation data also are incorporated into GDP estimates \u2014 the lower the inflation rate, Swonk notes, the better the GDP looks. An artificially reduced inflation rate will translate into higher reported GDP growth.<\/p>\n All this might have a limited economic impact \u2014 corporations, banks and academic economists generally have sources other than the government to reach their conclusions \u2014 if not for the partisan political exploitation of the numbers. <\/p>\n As Karabell reported in his 2014 book, Simon Kuznets, the government statistician who helped to codify the collection of government figures in the 1930s, was concerned about how politics would give the statistics a misleading social significance. <\/p>\n \u201cThese numbers have turned into absolute markets of the human condition,\u201d Karabell wrote, \u201cwhen they are simply statistical descriptions of specific systems.\u201d<\/p>\n Economists have warned that some economic factors haven\u2019t yet fully played out. That includes Trump\u2019s tariffs, which in their execution have been lower than they appeared on the surface, and higher healthcare premiums, which have been forecast or announced but won\u2019t actually become effective until 2026.<\/p>\n If the job market continues to weaken, that will show up more vividly in 2026. The interplay between \u201ca surging economy and a soft labor market,\u201d argues Joseph Brusuelas, chief economist at the business consulting firm RSM, \u201cis likely to be the major economic narrative next year.\u201d<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"The federal government\u2019s monthly releases of economic statistics \u2014 especially the inflation rate and growth as tracked by…\n","protected":false},"author":2,"featured_media":108711,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[19260,3291,58482,58487,7793,383,1285,58484,48,52,51,47,50,49,58485,58483,3906,212,1929,58486,1519],"class_list":["post-108710","post","type-post","status-publish","format-standard","has-post-thumbnail","category-los-angeles","tag-american-people","tag-datum","tag-diane-swonk","tag-economic-statistic","tag-economist","tag-economy","tag-growth","tag-inflation-rate","tag-la","tag-la-headlines","tag-la-news","tag-los-angeles","tag-los-angeles-headlines","tag-los-angeles-news","tag-lower-income-americans","tag-lower-income-household","tag-month","tag-number","tag-price","tag-statistic","tag-trump"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/108710","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=108710"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/108710\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/108711"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=108710"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=108710"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=108710"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}