“Facts are stubborn things, but statistics are pliable.”

– Mark Twain

The majority of U.S. economic data are based on statistical samples and the various figures are typically adjusted for seasonal variation. That means that the numbers are subject to some level of uncertainty. For some reports, the uncertainty is low. For example, the weekly jobless claims data are simply the total of state reports (occasionally, one or two states may need to be estimated due to late reporting). At the other end of the scale, new home sales results are reported with a gigantic level of uncertainty. Sales were reported to have risen 3.7% (±18.5%) in January, meaning that we can bE 90% certain that the true change was between -14.8% and +22.2%. One wonders why they even bother. Data typically take some time to be assembled. Preliminary estimates are subject to revision.

Data uncertainty can create some problems for investors. One should always look skeptically at any single piece of data and consider the broader array of information. Stock market participants often react to surprises in the data (if sufficiently far from the median forecast) even though the surprise may not be meaningful. In setting short-term interest rates, Fed officials look at a wide range of indicators, also paying attention to as much anecdotal information as they can assemble.

The government’s collection of economic data picked up following the Great Recession, with an eye toward understanding and preventing serious downturns. Many of the figures are geared to the old-style economy (plenty of figures on manufacturing, for example). However, despite long-standing budget constraints, the government has adapted to a changing economy over time and its data methodology has evolved. Note that in contrast to Canada, which has one statistical agency, U.S. data are spread all over the place (the Bureau of Census, the Bureau of Labor Statistics, the Federal Reserve, etc.). As an aside, this makes it more difficult to cook the books.

Candidate Trump said that the unemployment rate, officially reported at 4.8% in January, was really more like 42%. That might be true if one counted four-year olds and grandma as being part of the labor force, but it’s unclear why you would want to do that. It’s well known that labor force participation has declined significantly since before recession (from 66% to 63% more recently) and the employment/population ratio has fallen (to 59.8% in January, vs. about 63% just before the recession). Bringing the participation rate back up to 66% would allow the economy to grow faster. However, most of the decline in participation has been related to the aging of the population and some is due to a greater tendency for teenagers and young adults to remain in school.