President’s Letter

Dear Fellow NABE Members,

I don’t know exactly when it happened, but at some point I ceased being an up and comer and became a grizzled old hand.  I am now trotted out in front of new trainees to warn them about the dangers of an economic past that must seem terribly remote to twenty-somethings who have never experienced a real recession.

In truth, I find myself in analytic middle age, trying to find a middle ground between bank elders who are used to doing things more experientially and kids who are more comfortable with technical approaches.

In order to get the younger set to temper their zeal for statistics, I share with them a series of what have become “Tannenbaum’s Laws.”  Among them is the bromide that “The best of models are sometimes undone by the worst of data.” In a recent manifestation of this adage, revisions to the employment data have had a dramatic impact on perceptions of the expansion and thrown off many economic models.  Those responsible for producing this information have come under some media criticism for misleading us.

Allow me to rise to their defense.  The professionals at the Bureau of Labor Statistics and the Bureau of Economic Analysis, among others, do a difficult job very, very well.  Compare the breadth, quality, and timeliness of our economic data with that of other countries and you’ll conclude that we should be quite thankful for what we have.

The economists at the nation’s statistical agencies approach their task earnestly and intelligently.  But they are limited, in some ways, by resources; funds for measuring economic variables are not keeping up with the growing size and complexity of American industry.

Further, a large share of these monies is applied to sectors like agriculture and manufacturing, which are relatively easy to account for but which account for a shrinking share of GDP.  Less well covered are service companies and smaller firms, which have become important engines of growth.  As a colleague once noted, “We seem to be searching for our missing car keys only in the area immediately under the street lamp.”

NABE has been a persistent advocate for increased funding to America’s statistical agencies.  Further, the NABE Statistics Committee, under the direction of Past President Maurine Haver, plays the role of providing dialog between the agency executives and business and other data users.  I know you support our dedication to these important missions.

Those in the markets have perhaps become too much like the quants who come to work in my institution.  They become overly reliant on the data, and are upset when its frailty inevitably surfaces.  Perhaps a healthy dose of perspective would be part of the solution as well.

Speaking of perspective, I hope we can all place these issues into their proper place during the upcoming holidays.  This is a season of the spirit, and not the wallet.  I’d recommend investing some time with your families and some money with your favorite charity.  The returns to both will be exceptional.

Wishing you and yours all the very best for a prosperous 2007.

C. R. T.

Carl Tannenbaum
NABE President