Data Agencies Propose Funding for CPI, Services

With the transmission of the Bush administration’s fiscal year 2008 budget proposal to Congress on Feb. 5, the federal government’s three major data agencies announced they are seeking new funding for a series of improvements to key statistical programs.  On the top of the list are an already delayed plan to continuously update the consumer price index, services sector survey improvements, and research and development estimates that would feed into the national accounts.

Part of the Department of Labor, the Bureau of Labor Statistics is asking Congress for additional funds that would allow for continuous updating of two samples used to construct the consumer price index.   Proposed fiscal 2008 funding would have been the second installment for what are widely regarded as critical CPI updates, but the current year’s appropriations for BLS omitted the first money requested. That means the CPI’s housing and geographic area samples are still based on 1990 census data.  Several prominent economists, including NABE members, have expressed concern about the unprecedented delay in these updates given the wide usage of the CPI in federal budget and private sector.  [See BLS budget details below in this article.]

Both part of the Commerce Department, the Bureau of Economic Analysis and the Census Bureau have proposed major initiatives for fiscal 2008, which begins on Oct. 1, 2007.    BEA’s proposed budget calls for an additional $2.8 million to maintain current services and a $2.1 million increase for a research and development initiative that would enhance the gross domestic product accounts.  Census has requested new funding to improve its services sector surveys, to ramp up its preparations for the decennial census in 2010, and to conduct the Economic Censuses that are the infrastructure for key economic data series.  [See details for both BEA and Census below in this article.]

Because most of the federal government – including the three major data agencies – are funded in the current fiscal year under a Continuing Resolution that expires on Feb. 15, BEA, Census and BLS have curtailed some initiatives and delayed some spending in order to continue collecting and publishing the highest priority economic statistics.
Officials at each of the agencies said the current tight funding has resulted in cutbacks in travel, training, equipment replacement, and information technology upgrades.  Congress is expected to pass a full-year CR and it is almost sure to mean that funding levels at all three agencies will remain tight through the rest of fiscal 2007.

BLS Request Includes Funds for CPI Updating Plan

As requested in its fiscal 2008 budget, BLS proposed a total of $574.4 million, a figure that would be $37.3 million higher than the current year’s spending level set in the Continuing Resolution.  The agency said the proposed total would “enable the BLS to meet its highest priority goals and objectives for 2008.” 

About one-third of the proposed increase – $10.4 million – would fund delayed updates in CPI housing and geographic area samples.  Acting BLS Commissioner Phil Rones said: “The request for nearly $10.4 million would allow for continuous updating of these CPI components, which will yield better results than the once-a-decade updating done previously.  As noted in the budget submission, the housing sample and the area sample (the locations across the country where commodities and services are priced) are still based on the 1990 Census, a limitation that the administration, though its budget support, clearly feels must be addressed.”

Rones explained that while the fiscal 2007 request submitted by the President recognized the need for the CPI updating to the 2000 decennial census and included $8.0 million to start the process, “it appears clear at this time that Congress will not fund this effort in its forthcoming CR.”   While it typically takes several years for new decennial census data to be integrated into the CPI samples, Rones said, “The bottom line is that there has never been this long a delay between a decennial census and the subsequent update of the CPI area and housing samples.”

Assuming that funding for the updates makes it into the fiscal 2008 budget, Rones said BLS would begin to introduce the new area and housing samples in 2009, although the schedule is being reassessed.  But the 2000 decennial census data “will not be completely rolled in for some years after that, as we are going to a continuous process for the area and housing samples,” he added.

Diane Swonk, former NABE president and senior managing director of Mesirow Financial in Chicago, commented on the CPI funding delay:  “Given the extraordinary role the CPI plays in determining government outlays, it seems utterly absurd that the government wouldn't want to fund improvement in its measurement. The issue is of particular concern today as near-term estimates of CPI would likely be lowered with improvements. Hence, a get out of jail free card for Congress to slow pace of outlays growth.”

Other fiscal 2008 funding increases proposed by BLS would provide for improvements in current population survey times series available online, mass layoff data to enhance coverage of off shoring, and the first-time publication of local area data from the employment cost index.

A summary of the BLS fiscal 2008 budget proposal is available in the "2008 BLS Overview" at http://www.dol.gov/_sec/Budget2008/overview.htm#bls  in HTML format. The full DOL PDF can be downloaded athttp://www.dol.gov/_sec/Budget2008/overview-toc.htm

BEA Wants to Expand R&D Coverage

In its proposed fiscal 2008 budget, BEA is asking for a total of $81.4 million, which includes full funding for the agency’s ongoing programs and an additional $2.1 million for an initiative to measure the impact of research and development on the U.S. economy. As did the other major data agencies, BEA postponed “all but the highest priority information technology and statistical improvement projects” in the current fiscal year, given the flat-funding provided in the continuing resolution.

BEA Director J. Steven Landefeld said the R&D measurement issue is particularly important as policymakers, private analysts, and businesses have expressed a need for more information on how those investments affect output.  In September 2006, BEA and the National Science Foundation released a preliminary R&D satellite account, offering a prototype estimate treating R&D as an investment in GDP rather than an expense.

The $2.1 million initiative proposed for fiscal 2008 would extend work on the R&D satellite account, funded through 2007 by the National Science Foundation, and prepare the data for incorporation into the GDP by 2013, BEA said.

A fact sheet and other documents describing BEA’s proposed fiscal 2008 budget are available on the “Director’s Page” at: http://www.bea.gov/about/director.htm

Census Bureau Focuses on Decennial Census, Services

Most of the proposed increase in the Census Bureau’s budget for fiscal 2008 would go toward the agency’s ramping up for the 2010 decennial census.   Census has asked for a total of $1.23 billion, which includes $797.1 million for the 2010 decennial census program or $285 million more than the fiscal 2007 request.

Part of the additional funding would allow Census Bureau enumerators hired for the population count to use for the first time 500,000 GPS-equipped hand-held computers for major data collection efforts.

“This budget may be the most important budget year in decades for the decennial census program. The funds increase the likelihood that we can fully assess all our systems in the 2008 Dress Rehearsal, our dry run before the census. We’ll only have one chance to get it right,” said Census Bureau Director Louis Kincannon in a statement.

Census proposed an additional $46 million, for a total of $128 million, to fund the 2007 Economic Census, the massive data collection effort that occurs every five years to update the survey bases used to construct industry and sector surveys. Under the proposed schedule for the Economic Census, the bureau will mail five million report forms to business establishments with employees in December 2007.  Forms are due on February 12, 2008, with the collection period extending into late summer 2008, and the first results scheduled for release in March 2009.  The 2007 Economic Census will cover 84 percent of economic activity, with the Census of Governments covering an additional 12 percent of GDP.

The FY 2008 President’s budget also requests an additional $8.1 million for improving current measures of service industries by providing quarterly and annual coverage of 12 service sectors. These 12 sectors currently account for $7.3 trillion or 55 percent of GDP.

Council of Economic Advisers Chairman Edward Lazear touted the Census Bureau’s services initiative in a Feb. 1 speech to the Chicago Council on Global Affairs. The proposed FY 2008 budget for Census seeks to expand both the Quarterly Services Survey and the Services Annual Survey to eliminate a coverage gap.  Currently, these two surveys do not match the coverage of services in the Economic Census, the broad database used to formulate surveys of many different industries.  “Annually, 25 percent of GDP is uncovered, while 38 percent of GDP is not covered in the quarterly survey,” Lazear said.  The additional spending requested would eliminate this gap and “add to our understanding of the economic world in which we are operating,” he said.

The text of Lazear’s speech is available at http://www.whitehouse.gov/cea/lazear20070201.html.