MNI INTERVIEW: Concerns Mount Over US Data Reliability -Wilcox
MNI (WASHINGTON) - U.S. Commerce Secretary Howard Lutnick's abrupt termination this month of outside advisory committees to the Bureau of Economic Analysis, Bureau of Labor Statistics and Census Bureau, and his offhanded suggestion that GDP calculations exclude government expenditures, add to growing worries over the reliability of U.S. economic data, David Wilcox, former research director at the Federal Reserve Board of Governors told MNI.
The integrity of U.S. government data has been under threat from budget cuts, falling survey response rates and political interference for a number of years, and these new developments mark steps in the wrong direction for the key metrics on which the Fed, other agencies and businesses depend, Wilcox said in an interview.
"It's a confluence of factors that create concern. Budgetary pressures and the seeming general disregard for the importance of expertise -- the overall picture is one that calls for a high level of vigilance," he said in an interview.
FESAC
Wilcox chaired the 16-member Federal Economic Statistics Advisory Committee working with BEA, BLS and Census until the Trump administration disbanded it effective February 28, saying in a statement its purpose "has been fulfilled." Separate committees advising each of the data agencies were also terminated.
The committees comprised academics and industry experts all of whom volunteered their time to brainstorm ideas about the foremost challenges facing statistical agencies now, Wilcox said. The December meeting of Fesac brought together British, Canadian and German statistical agency representatives to discuss ways to lift response rates to labor market surveys as well as hearing ideas from academics on measuring AI.
Top leadership from BEA, BLS and Census are present and retain the authority to take or leave any recommended courses of action, Wilcox said.
"The challenges of economic measurement are never done. The goal of improving statistical systems is never accomplished. The economy evolves, demanding innovative solutions, and the technical questions from one year to next are never the same. The mission of Fesac and its sibling committees are ongoing missions," he said.
PARTISAN SKEW
Lutnick's comment in a Fox News interview this month that he will separate government spending from GDP could either be a harmless remark or a potentially irreversible incursion on data integrity depending on his actions, Wilcox said.
"He didn’t spell it out, but if he prohibits the BEA from compiling and publishing the government component of demand, this would go from a pointless exercise in political messaging to a reduction in the economic information available," he said.
"It raises the idea it's OK for political leaders to influence or dictate the publication and presentation of economic data and that's very much not OK."
Partisan efforts to influence U.S. statistics have rarely succeeded in the past, he said. "The trustworthiness of U.S. data is an enormous national asset. It has taken many decades to build up and can be severely eroded and damaged in a flash. The ability to restore the value of that trust would become a project of many future years." (See: MNI INTERVIEW: US Data Already Suffering From Underinvestment)