Current Uses And Unmet Needs Of Federal Economic Statistics

The federal statistical system costs less than one-tenth of one percent of the federal budget. The return on that investment for the taxpayer is enormous:

Social Security payments are tied to changes in the measured inflation. Retail stores decisions about what items to put on which shelves rely on government data describing local area demographics. The Federal Reserve and private-sector investors use government data to understand current economic conditions and the economic outlook, shaping global capital flows.

The federal statistical system (FSS) faces many serious challenges, and the Brookings Institution’s Economic Indicators Initiative (EII) has just released a series of papers with the mission of highlighting risks to the FSS and strengthening the production of economic statistics. 

One of those papers is on use cases, written by Rekha Balu and William J. Congdon, both at the Urban Institute. From their introduction:

How many jobs did the economy add last year? How many workers are currently unemployed, and which workers are most at risk of losing work due to AI? How much have the prices of essential items like groceries and housing risen since the pandemic? How many children live in poverty, and what public policies most effectively lift families out of poverty? How unequally is wealth distributed in the United States, and which policies have narrowed this gap over time? Providing answers to questions like these is essential—for monitoring and understanding the performance of the economy, for crafting public policy to effectively address challenges facing households and the nation, and for informing business and financial decisions across sectors.

The answers depend, in part, on information that requires the collection of data and production of economic statistics. And effectively serving the interests of the nation as a whole requires more specifically national statistics—data series that not only cover the whole of the country but also allow for analysis and comparisons across geographies, demographic groups, and over time, using common sources and methods. Meeting economic policy objectives at the national level, such as a low overall level of unemployment, requires national employment statistics. And because in both their production and use such data and statistics have the properties of a public good, it is both efficient and serves the nation for the federal government to collect these data and produce such statistics by investing in and operating a federal statistical system.

Recent and ongoing threats to the stability and independence of the federal statistical system, its component agencies, and its leadership have served to underscore this system’s economic and social value for a broad set of stakeholders. Faced with uncertainty around the future of the data and statistics they depend on, many of these stakeholders have sought to raise the salience of protecting the current system, and further, they have begun to look ahead, asking how a future federal statistical system can be designed and built on firmer foundations and strengthened to better serve needs of users and, ultimately, the nation. In this paper, we highlight the importance of current federal economic data and statistics for key users and synthesize recent research and advances in data collection and statistical production, suggesting directions for continued innovation. For each of several categories of economic data and statistics, we discuss briefly the main questions and needs of key data users, how current data and statistics are used, and unmet needs and directions for innovation.

The user groups include government, researchers, and civil society. I would highlight Balu and Congdon’s discussion of business users. Businesses need to know detailed information about the labor market for a variety of decisions, including hiring decisions, and about prices. Those are just two of the topics Balu and Congdon discuss in their paper. Check out the full paper here.

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