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Originally Posted by T-Rock
How reliable is John Williams  |
Mr. Williams has had the reputation of being more accurate with economic reporting than the Bureau of Labor Statistics, Department of Commerce, ect, for around 25 years. He started breaking down and correcting their models as a private consulting economist for companies who used the gov. figures in their own formulas and found the calculations weren’t accurate.
He explains the changing standards of inflation reporting here under
Special Consumer Inflation Focus.
Williams’ economic forecasting is based on his adjusted data and focuses on the leading indicators that have a historically strong track-record for predicting economic or financial changes. He is still sought after by companies (including banks) for it.
He predicted BHO would win in ’08 based on the following, but it also says a lot about us as voters and explains some politician’s disincentive to balance the budget:
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In every presidential race since 1908, in which consistent, real (inflation-adjusted) annual disposable income growth was above 3.3%, the incumbent party holding the White House won every time. When income growth was below 3.3%, the incumbent party lost every time. Again, with redefinitions to the national income accounts in the last two decades, a consistent measure of disposable income as reported by the government has disappeared. Yet, even with official reporting, the current annual growth in real disposable income is at 2.2%, well below the traditional 3.3% limit. Link
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It turns out what’s more important than the Debt-to-GDP ratio is the revenue-to-spending ratio. Peter Bernholz found that every country which barrowed over 40% of what it spent over a long enough went into hyperinflation eventually. We were over 40% for the first time in ’09 and will be again this year. OTOH Japan has been for 8 or so years so it’s really hard to time. Or maybe history won’t repeat itself.