Academic journal article Review of Business

Measurements for the Future: The Vital Role of Federal Statistics

Academic journal article Review of Business

Measurements for the Future: The Vital Role of Federal Statistics

Article excerpt

Good information is vital for good decision making - this is a truism repeated in all management, business, economics and information science texts. It is also a truism to repeat that the volume of information available today has vastly expanded as compared to even ten years ago. Obviously, whether decisions in the future will be good or bad depends on the quality of this information. Many researchers and users of statistical information, however, are concerned that both the quality and the availability of good statistical information will deteriorate in the future, especially that available from federal statistical agencies. The reason for this is that these agencies are suffering from the Washington budget ax. The extension of a short term, cost cutting approach to these agencies is part of the short term effort to cut the federal budget, but the real cost lies in the future when the long term results show up as declines in accuracy, coverage and availability of good information. Then those dependent on these sources for good information will, unfortunately too late, recognize the shortsightedness of today's cutbacks. The real challenge for the twenty-first century is to build on the remarkable statistical system developed in the twentieth century, not to raze it.

The three-week December-January furlough resulting from the budget impasse placed a great strain on federal statistical programs and provided a warning about the vulnerability of statistical programs for all users. Statistical surveys which were in the field had to be curtailed. Two affected programs were the Current Population Survey (CPS) and the Survey of Income and Program Participation. Because of the delay in the CPS, the Bureau of Labor Statistics missed its job statistics publication schedule for the fIrst time since 1950. The Bureau of Economic Analysis' release schedule has not yet returned to normal. The importance of federal statistics was further underlined by the extreme financial market reaction to the employment and unemployment data released for February. It remains to be seen if the changes were real or aberrations caused by the blizzard of 1996, the federal furloughs, or other unusual circumstances. The sensitivity of the markets underlines the importance of producing quality data on time.

Federal statistical programs will cost about $2.8 billion in Fiscal Year 1996. This may seem like a large amount, but on a per capita basis, it is only $10.44 per person, and only 0.2 percent of the total federal budget. The three federal statistical agencies that produce most of this country's economic statistics are the Bureau of Economic Analysis, the Census Bureau and the Bureau of Labor Statistics. Together they account for about 28 percent of total federal spending on statistics.

The U.S. government's statistical system is among the world's leaders, but it is in trouble. The problems range from inadequate funding to the complexities of measurement in a fast-changing world. In the economic sphere, the problems most frequently mentioned are the tendency of the consumer price index and other price indexes to overstate inflation, the undercoverage of the important service sector, the problems of measuring quality improvements and output in a service-dominated economy, the outdated industry and occupational classification systems, the undercount of population, and the deficiencies of measures on international capital flows.

It is ironic that the federal statistical system is threatened at such a propitious time for retrieving information and analyzing data. Electronic dissemination of government data is provided in many forms - the Internet, electronic bulletin boards, faxes, e-mail, diskettes, magnetic tape, and CD-ROM. Many of these sources are easy to access and use for anyone with computer resources. People without computers who are dependant upon paper-based information either by preference or because of lack of equipment will be at a disadvantage. …

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