It's easy to criticize government statistics like unemployment, inflation and the GDP. However, when you look at how complex they are, and how quickly the government needs to compile them, it is clearer why there will never be such a thing as a perfect number.
Ever hear someone say "You can't trust those government statistics"? When they say inflation is 1.6 percent, do you feel they might be fudging the numbers to bamboozle the masses? Many people, even the highly educated, feel there is a government conspiracy to doctor the numbers and make them look better or maybe just make us feel better. Investopedia, one of the more respected sites, has a particularly harsh view of these numbers. Is that true, though? Is your government "cooking the books," as it were? Let's take a look at one of the most quoted, and disputed, sets of statistics people look at -- the Consumer Price Index, or CPI. The goal of the Consumer Price Index is to get an idea of whether inflation went up or down. The agency which gives us the CPI is the BLS (Bureau of Labor Statistics, an agency of the Department of Labor), which also happens to be the agency which compiles unemployment statistics. (At that, critics nod their heads sagely: "Hmmm … it figures.") Critics of the CPI seem to feel inflation statistics are always understated, pointing to some item which has gone up way more than 1.6 percent, or whatever number the BLS says it is. "Why, the price of beef at my supermarket (or home prices, or any other item) went up 20 percent last week. How can they say inflation only went up 1.6 percent?" Impossibility Indeed, how can they? Without using the National Security Agency, how can any government know how much you paid for your cheese this week? Not just you, but the other 300 million people in America? How do they figure the price of cheese if you had a coupon for 20 percent off, and the gal behind you had to pay full price? And what if cheese was on special this week? Is that inflation going down or something they should ignore? And what if you see that the price in your supermarket went up and you decided to switch to Costco or Walmart, subsequently paying less? Is that now deflation? How does a government tally all this information -- assuming they could even get their hands on that many billions of transactions -- and do it within a week of month's end?