Saturday, November 14, 2009

Who Cares About Federal Economic Statistics?

When it comes to economic data, it's Obama over GW.

Yes, I know the private sector could do just as an efficient job, if not better, at collecting data that is really needed, but I find this insider report fascinating as to what is really going on. Did you know that Congress cut $35 million from the BLS budget? And that cuts in the Census budget also left the BLS unable to update its consumer price index survey with information from the 2000 census. The CPI's housing sample thus continues to be based on data from the 1990 census.

Under Obama, the BLS budget and the Census budgets are being boosted, which might be more because Obama fully expected his ACORN cronies (until their recent troubles) to be collecting some of the census and BLS data, than a real desire for more data. Nevertheless, the budgets are up

Here's Andrew Reamer writing for Brookings:
In response to former President George Bush's threat to veto what he viewed as excessive federal spending, Congress cut the budgets of a number of agencies, including three whose responsibilities include gathering the nation's vital economic statistics: the Census Bureau, the Bureau of Labor Statistics, and the Bureau of Economic Analysis.

These agencies didn't yield particularly large savings. Congress snipped some $35 million from the BLS and the BEA and delayed about $60 million for the Census Bureau, all to help cover a $22 billion gap in a $3 trillion appropriations bill.

Statistical values

Congress could order these cuts because most of its members don’t fully comprehend the value that the $1 billion federal economic statistical system provides to the nation. Data collected by government agencies guide fiscal and monetary policy in a $14 trillion economy and inform the investment decisions of 6 million U.S. firms. Without timely and accurate statistics, thousands of private and public agencies would be unable to successfully carry out efforts in transportation, education, healthcare, affordable housing, and economic, community and workforce development.

Congress’ actions pushed the federal statistical system, which had not been faring well for some time, into dire straits. Because of the budget cuts, in 2008, the Census Bureau couldn’t add new quarterly and annual data it planned to collect on the nation’s finance, insurance and real estate industries. As a result, the BEA now lacks optimal data for measuring economic activity in those areas that were at the heart of the recent recession.

The cuts also left the BLS unable to update its consumer price index survey with information from the 2000 census. The CPI's housing sample thus continues to be based on data from the 1990 census, which has created a visible, growing age bias in the sample.

There were other consequences of Congress' budget cuts as well.

* The BEA said it would stop publishing industry subsector estimates for metro and county GDP and earnings. Researchers therefore would be unable, for instance, to track Detroit's dependence on auto manufacturing.

* The BEA also halted the collection and publication of detailed state foreign direct investment data, despite protests from state economic development agencies, which depend on that information to help attract overseas firms.

* The Census Bureau cut back and postponed the 2008 "dress rehearsal" for the 2010 census, leaving it unable to test its procedures and technologies for the upcoming decennial count.

* The BLS killed current employment statistics for 65 small metro areas.

* The Department of Housing and Urban Development discontinued the residential finance survey, which gathered data on mortgage debt, and had dramatically cut back the number of metro areas covered by the American Housing Survey, which examines local housing conditions and markets.
Read the full report here.

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