What Is the Real Economic Story of Our Times?

Will you help us with some important economic research? 

We want to get to the bottom of what has happened to the US and world economy since the disaster of lockdowns. Something doesn’t feel right, and we would like to take a more objective look and tell a different story. If you would like to help us raise a total of $25,000 for this important study, you can contribute here. 

Here’s the background. 

The last four years have presented us with a deeply uncomfortable truth. In a data-soaked world, in which collection and verification have never been easier, much of what comes our way is not reliable. 

We learned this during the pandemic response. What seemed like objective science turned out to be subject to a million exigencies of collection, assembly, and presentation. The temptation to manipulate the data to tell a preferred story was too powerful for many to resist. 

We gradually came to learn that we were being presented with a false reality. The old wisdom about how to lie with statistics came rushing back, as we dug ever deeper into the mess of data and its hidden implications, many of which flipped the preferred narrative on its head. 

As time went on, we discovered ever more. The data did not show that closures controlled the virus at all. Neither did masks. Neither did the vaccines. All impressions in real time were an illusion and probably a deliberate one. After all, the pandemic planners overthrew half a millennium of progress in freedom. How can they admit that it was all for naught?

The Economic Chaos 

There is another field that has been similarly affected, namely economics. Starting with the global lockdowns of 2020, the data reflected huge swings in everything from employment to output to trade flows. There was never anything on record that compared. It was the same with government spending, money creation, and the financial markets. 

That upheaval gradually faded but left us with real confusion about where we were precisely in the business cycles that have been carefully clocked for more than a hundred years. The conventional wisdom says that those days are long gone and the full recovery is already here. 

Are we sure about that? The great inflation of our times began in early 2021 and has continued ever since. According to official calculations, the dollar has lost about 21 cents of value in this time. But looking more carefully, one wonders. Just check this according to your own experience. Does this seem even close to the truth? 

The Consumer Price Index excludes interest rates that soared (economists who have looked at that estimate that inflation reached 19 percent in 2022-23), and also the costs of housing and car insurance. The health insurance numbers are measured against medical consumption, yielding figures that are not even slightly believable. 

Other factors raise further doubts. The data collectors cannot possibly provide a full accounting of shrinkflation, quality declines, and added fees that never previously existed. Inflation has become a hot potato that everyone hides. Then you have the ubiquitous “hedonic” adjustments that lower prices based on more value based on quality of service rendered. 

On the one hand, this seems maybe intuitive. You would rather have a television made now rather than one from twenty years ago even at the same price. On the other hand, do economists really possess the wisdom to know precisely how much to adjust those prices for supposed quality increases? Other measures that exclude hedonic adjustments – calculating a consumer basket according to pre-1983 methods – show inflation at twice the rates. 

Retail sales and factory orders are routinely reported with no inflation adjustments in any case. This means that a haircut last month for $20 and one this month for $25 yields a 25% increase in sales even though you have consistently only purchased one haircut each month. It’s the same with factory orders: official data measures increased prices, not more orders. 

This makes absolutely no sense. What if all these numbers were adjusted by a realistic figure on inflation?

The Messes Are So Many

The post-lockdown jobs data has been a consistent mess. A large gap has opened up between two surveys: household vs. establishment. The household data shows a large loss in full-time jobs while the establishment data seems to be double and triple-counting to yield consistent increases in jobs. 

And what would a more accurate inflation number do to income data? Is it really up or might it be dramatically down? Using official data, it is largely flat of course but what if we adjust for the actual prices people are paying? Household income might have been utterly crushed over four years, precisely as you suspect. 

Now we come to Gross National Product, the output measure we use to calculate where we are in the business cycle. Since they were first put together in the 1930s, such national income accounting has classified government spending as increased output. This is why the Second World War seemed to have “saved” the US economy. Economists have long debunked this claim. It took thirty years after the war to flesh it all out but now everyone realizes that the recovery only began in 1948. 

But what about the largest increase in government spending in the postwar period that happened in 2020 and 2021? That too is now classified as improved output. These claims have not been debunked though they should be. Moreover, the GDP is reported not in nominal terms but with an inflation adjustment. Two successive quarters of declining real GDP is considered recessionary. But what if we made two adjustments here: excluding government spending from GDP and then adjusting the results by a realistic estimate of inflation?

The Greater Depression

You get the picture. It is possible that we have never truly left the recession or depression that began in 2020. What’s more, this problem might be global. This is the conclusion that we came to in our article posted at Brownstone. Since its posting, we’ve not encountered anyone who has disputed the facts of the case. 

If that is so, why are we not hearing more about this? 

One suspects that it is for the same reason that we didn’t get the truth during the pandemic period. When a point of view runs contrary to the professional consensus and government messaging priorities, it recedes far in the background. No one has an incentive to tell another version of the official story. Sound familiar? Indeed it does. 

In this case, however, the consequences of being wrong are quite dire. If we have been in recession and even depression for four years and do not know it, that would explain so much about what has happened to the US standard of living. All surveys show that both consumers and small businesses are deeply pessimistic. People simply do not believe these official numbers. 

The Proposed Study

The study we are hoping to conduct would adjust all data for inflation, retail sales, factory orders, jobs, GDP, and income, and map out three possible scenarios: best case, medium case, and worst case, while showing all our work so it can be checked and disputed by anyone. 

Doing such work requires time and some serious technical chops, to which we do indeed have access. Yes, it would be nice if industry or university economists would get busy doing this right now but, as with the Covid experience, it turns out that getting the truth out there requires independent support and publishing. Strange but true. 

That means that the hard work falls to Brownstone Institute. If you are interested in helping, you can donate now. If we can raise the funds, the work can begin right away and we hope to have publication ready by the fall, while releasing results along the way. 

Why is this so crucial? The official story is that lockdowns did not do any great harm to prosperity, nothing that was lasting in any case. We suspect otherwise. It would be important to know. Otherwise, the history books will forever gloss over the turning point in modern history and perhaps even in the history of civilization. 

Surely, we should know the truth, whatever it is. Will you help us find it?