In response to an FT article by Sam Fleming on 22nd May 2015, entitled 'Janet Yellen expects US economy to strengthen'
The “statistical noise” Ms Yellen is talking about is most noticeable every time she opens her mouth.
The latest accounting trick is the adoption of double seasonal adjustment, which will be introduced in July, just in time to ensure that the final Q1 print is not negative.
This is just the latest in governmental sleight of hand. E.G. the bulk of defence spending is typically very high in Q3 because the defence budget ends on September 30th and as with all government departments, spending leaps just before year end to avoid a cut in the next year's budget. Therefore the figures are seasonally adjusted. Last year they were not...by a mysterious coincidence this enabled the government to unveil that big 5% figure just in time for the elections.
The game is basically - "If this is the answer we want, what question do we need to ask?"
Ms Yellen's stated views on the economy are designed to move market sentiment to keep this charade going in the hope that a robust recovery will finally kick in after 78 months of ZIRP - this is politics not economics. Ultimately it will fail because the problems are structural and they have not been fixed. The Fed will have no more success abolishing the business cycle than did Karl Marx, Gordon Brown or the Politburo.