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The statistics corner: a brief look at Bush's statistics budget.

IN EARLIER COLUMNS we discussed the needs for improving economic statistics. The Bush budget for 1991 includes some initiatives for budget improvements that result from leadership by the Council of Economic Advisers. Recently, NABE President jim Smith testified before the joint Economic Committee in support of a number of the proposed improvements. Currently the NABE Statistics Committee is reviewing a number of specific additional improvements.

In Building a Better America, President Bush expressed his support for a ". . . sound, balanced program to collect and disseminate comprehensive and accurate statistics on America's population and its economy." He established a Working Group on the Quality of Economic Statistics, which reports to the Economic Policy Council. Chaired by Michael J. Boskin, Chairman of the Council of Economic Advisers, this working group includes representatives of the major producers and users of economic statistics in the federal government. The Economic Report of the President issued in 1990, states that based on the working group's recommendations, the President has approved the following multiyear initiative to improve economic statistics:

1. The initiative will build on the data improvement

efforts already underway. Where possible, existing

plans for improvement will be complemented by

reprioritizing, using alternative methods, or revising

the existing timetable for improvements.

2. The initial set of recommendations approved by the

President include both short- and long-term improvements,

and focus on the most important steps

required to maintain and improve the "core" economic

statistics in three major areas of policy concern:

(a) productivity, output, and prices; (b) investment,

saving, and wealth, and (c) employment,

income, and poverty. * Joseph W. Duncan is Corporate Economist and Chief Statistician, The Dun & Bradstreet corporation, New, York, NY.

3. The statistical agencies have reprogrammed funds

during fiscal year 1990 to address the priorities

identified by the working group, and the relevant

agencies are currently developing specific plans to

implement the working group's improvements.

4. The fiscal 1991 budgets for the relevant statistical

agencies include additional funds to begin to implement

some of the recommendations.

5. The statistical agencies will report back to the working

group with their detailed plans to implement

its recommendations.

6. The working group will develop a comprehensive

long-term program to improve the economic

statistics. In addition to developing options to implement

fully the working group recommendations

made to date, the program will consider organizational,

methodological, and other overall improvements,

as well as the resources required to

implement them. It will present options to the Economic

Policy Council for possible recommendations

to the President.

Below we review the President's budget for FY 1991 for the Bureau of Economic Analysis (BEA), the Bureau of the Census, and the Bureau of Labor Statistics (BLS) to see what provisions have been made to carry out his commitment to improve federal economic data produced by these agencies. BUREAU OF ECONOMIC ANALYSIS

The budget request for FY 1991 is $34.3 million, of which approximately $7 million is a program increase to be used for improving BEA's economic data. This increase would be used to maintain the quality of the GNP and other estimates in the U.S. national economic accounts. BEA will use the funds to speed up the compilation of the annual input-output tables, cutting the lag from the current four to six years to two to three years. In addition, its estimates will be strengthened in the following areas where recent changes in the economy have been most significant and the source data most inadequate:

1. Develop improved measures of consumer expenditures

on services and of output of service industries.

2. Develop measures of prices similar to the 1985

price index for computers for other "high tech"

goods (such as semiconductors, communications

equipment, and medical equipment) for use in deflating

estimates of business fixed investment and

estimates of imports and exports.

3. Develop measures of the detailed types of goods

and services purchased by State and local governments.

4. Develop measures of the activities of the nonprofit


5. Develop measures of nonresidential construction

prices directly by means of a statistical survey.

Part of the increase for FY 1991 would be used' to modernize and extend the U.S. national economic accounts to bring them into line with the United Nations System of National Accounts by 1995. This is a major initiative that would require the development of additional accounts and reworking of existing accounts. The U. S. national economic accounts would be extended to include a full set of accounts for the household, business, government, and rest-of-the-world sectors. The extension would consist of adding saving-investment accounts, capital finance accounts, revaluation accounts, and end-of-year balance sheets.

The increase also would provide funds to maintain and to strengthen the balance of payment estimates by: (1) measuring the net international investment position of the United States at current values; (2) developing measures of international services not adequately covered in the balance of payments (such as fees for financial services and truck transportation to and from Canada and to and from Mexico); and (3) improving methods for preparing short-term projections of balance of payments.

BEA also will use the increase in funds to improve the data on foreign direct investment in the United States and U.S. direct investment abroad. This effort would include more state and industry detail for foreign-owned enterprises, improved compliance with the reporting requirements of BEA direct investment surveys, and improved analysis and more current published information on foreign direct investors. BUREAU OF THE CENSUS

The FY 1991 budget for the economic statistics program of the Census Bureau contains an increase of about $7.5 million for improvements in business statistics, manufacturing statistics, general economic statistics, and foreign trade statistics. The planned improvements include:

1. Improving the overall quality of the data from the

Advanced Monthly Retail Sales Survey by reducing

nonsampling problems, reducing biases associated

with telephone followup, and exploring electronic

reporting to accelerate reporting and reduce reporting


2. Improving and expanding service statistics by:

(a) improving the measurement of services purchased

by industry by collecting these data annually;

(b) improving the small company financial data by

enhancing the sample;

(c) expanding the collection of corporate financial

data to include the service sector in a quarterly

survey program;

(d) collecting annual detail for more service industries;


(e) identifying and publishing new data for emerging

growth industries in the manufacturing,

construction, wholesale, retail, and service


3. Improving the quantity and quality of responses to

the Manufacturers' Shipments, Inventories and Orders

(M3) Survey through the introduction of a rotating

probability sample of medium and smaller


4. Conducting a new annual survey to collect new and

anticipated investment data from all business sectors

at the national level.

5. Researching methods for improving the Standard

Industrial Classification coding.

6. Funding additional data sources and developmental

activities for the National Trade Data Bank.

7 .Improving the quality of foreign trade data through

follow-up programs and educational efforts directed

toward exporters, importers, and brokers. BUREAU OF LABOR STATISTICS

The FY 1991 budget requests an increase of $2 million to initiate improvements in its employment, prices, wage, and productivity data series. The focus will be on providing coverage or separate detail for new or growing industries covered by BLS' economic indicators. The improvements to be made include:

1 .Expansion and improvement of the Current Employment

Statistics (CES) Program to provide for

monthly publication of employment, hours, and

earnings data for thirty-five additional service sector

industries. To reduce the frequency and extent

of revisions in CES preliminary estimates of employment

and earnings, modern collection technology

will be introduced in the twenty largest

states. These preliminary estimates are used in the

BLS monthly employment situation series, are a

major indicator of the previous month's business

activity, and are used in other principal federal economic

indicators - the GNP, industrial production

index, and the index of leading indicators. 2. Expansion of the Producer and International Price

Programs to provide measures of price changes for

currently uncovered service sector industries, such

as the health services industry and the transportation

service sector. 3. Expansion of the Employment Cost Index Program

to provide separate measures of the change in employment

labor costs for the nursing and personal

care facilities industry. 4. Expansion of the Industry Productivity Program to

include separate measures for currently uncovered

industries in such areas as financial services, insurance,

wholesale trade, health services, and other

personal or business services. Program coverage

would be extended at the rate of four industries

per year, rather than the current two industries per

year. These improvements in economic data that are provided for in the FY 1991 budget request are responsive to the President's support of the recommendations made to him by the Working Group on the Quality of Economic Statistics. They are designed to make some high priority improvements in a timely manner in the quality and coverage of the data used in producing the more important economic series. These proposals and other areas for improvement are currently being reviewed by the Statistics Committee of NABE to underscore the importance of good data for sound policy making. As jim Smith noted in his testimony to the joint Economic Committee, "We cannot expect policy to move in the right direction or businesses to plan adequately for the future if we don't have a good idea of what has happened in the past, especially the recent past." THE LOSS OF BUSINESS CONDITIONS DIGEST

In the losses column we must note the passing of Business Conditions Digest, a frequent companion for many students of the business cycle. Geoffrey Moore put it well when he sent a letter to the Wall Street journal (unpublished at the date this item goes to press). In part Geoff's letter stated:

"Your two-inch news story on March 14 was

not, in my judgment, a sufficient obituary for

the demise of Business Conditions Digest, the

government's monthly publication on leading

indicators. BCD, as it is known among its admirers,

was born in 1961, when the Commerce

Department had the foresight to adopt the

leading indicators as a persistent and reliable

way of telling where the business cycle is heading.

At that time BCD stood for Business Cycle

Developments. The words, but not the letters,

were changed a few years later, when the government's

foresight failed to perceive that the

business cycle would persist, as it has to this

day. Why else are there news stories practically

every day about whether a recession is

or is not about to break?

BCD is being quietly buried in the Survey

of Current Business, a useful publication but

not one devoted to the business cycle. Now

would have been a good time not to bury BCD

but to expand it. Why not cover international

developments more thoroughly, since their

impact on the U.S. business cycle is large and

growing? Why not cover indicators of inflation

more thoroughly, since inflation is so closely

tied to the business cycle and policy-makers

must consider both? Why not provide more

indicators of the varying fortunes of the service

industries, since they now play a dominant role

in our economy?

As we raise a glass to BCD and toast its 29

years of service as well as the example it has

set for many other countries, let us resolve

that its mission will continue to be fulfilled,

whether by government or private initiative."
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Author:Duncan, Joseph W.
Publication:Business Economics
Date:Jul 1, 1990
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