The Shutdown’s Data Blackout

Opinion piece by Katherine G. Abraham and John Haltiwanger in The New York Times: “Today, for the first time since 1996 and only the second time in modern memory, the Bureau of Labor Statistics will not issue its monthly jobs report, as a result of the shutdown of nonessential government services. This raises an important question: Are the B.L.S. report and other economic data that the government provides “nonessential”?

If we’re trying to understand how much damage the shutdown or sequestration cuts are doing to jobs or the fragile economic recovery, they are definitely essential. Without robust economic data from the federal government, we can speculate, but we won’t really know.

In the last two shutdowns, in 1995 and 1996, the Congressional Budget Office estimated the economic damage at around 0.5 percent of the gross domestic product. This time, Moody’s estimates that a three-to-four-week shutdown might subtract 1.4 percent (annualized) from gross domestic product growth this quarter and take $55 billion out of the economy. Democrats tend to play up such projections; Republicans tend to play them down. If the shutdown continues, though, we’ll all be less able to tell what impact it is having, because more reports like the B.L.S. jobs report will be delayed, while others may never be issued.

In fact, sequestration cuts that affected 2013 budgets are already leading federal statistics agencies to defer or discontinue dozens of reports on everything from income to overseas labor costs. The economic data these agencies produce are key to tracking G.D.P., earnings and jobs, and to informing the Federal Reserve, the executive branch and Congress on the state of the economy and the impact of economic policies. The data are also critical for decisions made by state and local policy makers, businesses and households.

The combined budget for all the federal statistics agencies totals less than 0.1 percent of the federal budget. Yet the same across-the-board-cut mentality that led to sequester and shutdown has shortsightedly cut statistics agencies, too, as if there were something “nonessential” about spending money on accurately assessing the economic effects of government actions and inactions. As a result, as we move through the shutdown, the debt-ceiling fight and beyond, reliable, essential data on the impact of policy decisions will be harder to come by.

Unless the sequester cuts are reversed, funding for economic data will shrink further in 2014, on top of a string of lean budget years. More data reports will be eliminated at the B.L.S., the Census Bureau, the Bureau of Economic Analysis and other agencies. Even more insidious damage will come from compromising the methods for producing the reports that still are paid for and from failing to prepare for the future.

To save money, survey sample sizes will be cut, reducing the reliability of national data and undermining local statistics. Fewer resources will be devoted to maintaining the listings used to draw business survey samples, running the risk that surveys based on those listings won’t do as good a job of capturing actual economic conditions. Hiring and training will be curtailed. Over time, the availability and quality of economic indicators will diminish.

That would be especially paradoxical and backward at a time when economic statistics can and should be advancing through technological innovation instead of marched backward by politics. Integrating survey data, administrative data and commercial data collected with scanners and other digital technologies could produce richer, more useful information with less of a burden on businesses and households.

Now more than ever, framing sound economic policy depends on timely and accurate information about the economy. Bad or ill-targeted data can lead to bad or ill-targeted decisions about taxes and spending. The tighter the budget and the more contentious the political debate around it, the more compelling the argument for investing in federal data that accurately show how government policies are affecting the economy, so we can target the most effective cuts or spending or other policies, and make ourselves accountable for their results. That’s why Congress should restore funding to the federal statistical agencies at a level that allows them to carry out their critical work.”