Amidst all of the Fuzzy Numbers offered up, there are two that I trust implicitly because they cannot be gamed, massaged, seasonally adjusted, imputed, or hedonically inflated.
They are taxes and gaming revenues.
Today there were a couple of mind-blowing numbers. Think about these next two articles as if you were a government budget official trying to make plans or a social scientist attempting to assess the current social mood.
California November revenue $1.3 billion below estimate
SAN FRANCISCO (Reuters) – California’s general fund revenues in November were $1.3 billion, or 18.5 percent, below expectations, suggesting the government of the most populous U.S. state could run out of money as early as February, State Controller John Chiang said on Tuesday.The government of California, the world’s eighth-largest economy, must contend with a $28 billion combined shortfall for the remainder of its current fiscal year and its next fiscal year, which runs from July.
Nevada casino win down 22.3 percent in October
CARSON CITY, Nev. (AP) — Nevada casinos had a record slump of 22.3 percent in winnings during October as gamblers worried about a worsening economy backed off from betting, the state Gaming Control Board reported Wednesday.The resorts won $905 million in October, resulting in the largest percentage decline since the board began producing monthly reports in the early 1980s. It was the 10th straight month of slumps compared with the same period a year earlier, the Control Board said.
In CA, the quote of the day was from State Controller John Chiang, who said, "November blew away even the most pessimistic estimates."
While I think it’s helpful to use these record breaking slumps to frame the current problem, it’s also important to keep in mind that they are being compared to a dizzying height that was also record breaking.
The harder they come, the harder they fall.
Nonetheless, these are the unfudged numbers and they come from (1) the largest and most prosperous state in the union (which would be the world’s eighth largest economy if it were sovereign) and (2) an industry that has proven bullet-proof in every prior recession on the books.
Together they indicate that yr/yr our larger economy is down somewhere in the vicinity of 20% in activity. This matches my back-of-the-envelope calculations based on automobile and housing sales.
I raise this because the gap between our official GDP, which is hedonically adjusted and imputed to the tune of approximately 35% over actual cash activity, and the real economy, is large and growing larger. This gap will magnify the impact of servicing both past and new debt.
In essence, the difference between a 20% real world fall off in activity and a still-official "1%-2% GDP decline" represents a gap between reality and our official statistics. Let’s call it the illusion gap.
My wish for the state budget officials of CA, and every other state, is for them to understand that relying on the official GDP numbers is a dangerous (foolish?) proposition. I am sincerely sorry for the troubles and the pain they are now about to experience as they attempt to balance the books. I hope that they learn from this and find ways to apply more independent thought and common sense to their future projections.
In the meantime, my personal belief is that more benefit lies in what can be divined from the tax revenue and gambling data than in anything that comes from the Federal data sets.
But, of course, at the bottom of it all, there is no combination of new growth, new borrowing, and cheap money that can possibly fix the mess we’re in. That would require understanding that our money system is both internally and externally flawed.
That is, our money system has a math problem related to its dependence on exponential debt-creation and a real-world problem due to the fact that it is based on infinite growth.
And that’s the largest illusion gap of them all.
by former_user