Sometimes, when something sounds too good to be true, it probably is. This can be especially true when it comes to data being touted in government reports.
Take China’s government economic data, for example. The Chinese Communist machine routinely manipulates economic data to please their political superiors. The reported statistics are often irreconcilable with the observed reality because the economic reports are manipulated.
For example, a March 2024 Wall Street Journal story reported that retail sales allegedly grew around 7 percent in 2023 according to China’s National Bureau of Statistics. Yet, while consumption growth was supposedly robust, the WSJ also noted that online sales at the country’s largest retailer (Alibaba) were falling, the savings data was indicating that households were saving more and consuming less, and local government revenues were falling.
It seems improbable that retail sales were growing robustly while sales at its largest retailer were declining. And many independent analyses are recognizing that the official data provide a vastly distorted picture of the economy.
Distorted reports do give politicians the ability to crow about the country’s allegedly strong economy and may even provide short-term political benefits to China’s leadership. There are, however, adverse long-term consequences.
China’s economy is plagued with pervasive mal-investments and it is perilously unsustainable. Papering over these problems with inaccurate reports discourages the necessary reforms and sets the economy up for a massive crisis in the not-too-distant future. We’re experiencing a local version of this with the recent release of Sacramento’s homeless point-in-time count.
How are the two examples related? Just like a structurally unsound economy is a pall hanging over Chinese leadership, the homeless crisis is undermining people’s faith in California’s politicians. It is essential, consequently, that city and state leaders sustainably address this problem.
The latest homeless count by Sacramento seems to indicate that the city has made great strides addressing this crisis. The problem is that this data is inconsistent with other realities from the street.
According to the latest annual count of the homeless population, the number of homeless people living in Sacramento fell 29 percent to 6,615 people this year compared to 9,278 people last year. Additionally, there were 41 percent fewer unsheltered homeless (e.g., people sleeping outside). If this count is accurate, then it is fantastic news.
But there are those disconcerting discrepancies. As the Sacramento Bee reported,
nonprofit Loaves & Fishes in a Wednesday news release called the report “incredibly hard to believe.” Its own data suggests the unsheltered Sacramento homeless population has increased. In 2023, the River District nonprofit served 30,000 more meals than in 2022, a 20% increase, and served 690 more total guests, the nonprofit said in a Wednesday news release.
Additionally, the number of homeless people on Sacramento’s waitlist for shelter beds has increased. According to the Sacramento Bee “in October, there were about 2,200 people and an additional 684 families on the [waitlist], according to city data. As of late May, there were about 2,550 people and 744 families on the list.”
A growing waitlist for shelter beds, while consistent with Loaves & Fishes’ experience of rising numbers of homeless, is inconsistent with the city’s reported decline in homelessness.
There are also some methodological concerns. A new firm with a different methodology was used to do this year’s analysis of the homeless count. While the nonprofit in charge of the count claims that the methodology is sound, there is no counterfactual data to confirm what impact this change could have had. Additionally, there are concerns that more homeless are hiding due to stricter law enforcement actions, which many suspect are distorting the count.
While the latest official homeless count is a positive signal, the findings seem too good to be true. Rising shelter waitlists and greater demands for homeless meals provide reasons to doubt the report’s accuracy. Given these uncertainties, city leaders should not fall for the China trap – believing unrepresentative government reports over actual observed outcomes.
Dr. Wayne Winegarden is a senior fellow in business and economics at the Pacific Research Institute.
