Economists Critical Of Less Being Spent On Economic Data Gathering
DAVID GREENE, HOST:
The U.S. Commerce Department yesterday acknowledged that it made a mistake with its math and has had to revise a full decade's worth of key economic data. As NPR's Chris Arnold reports, some economists think lawmakers should be paying attention to this.
CHRIS ARNOLD, BYLINE: The data in question involves construction spending, and total annual construction spending in the U.S. is upwards of $1 trillion a year. So these are important numbers for gauging the health of the economy.
MARK ZANDI: They are important. The Commerce Department figured out that they were processing the data incorrectly.
ARNOLD: Mark Zandi is chief economist of Moody's Analytics. He says that the government basically admitted that it goofed on the way it was tabulating data on home-improvement spending. The revised numbers show that spending was stronger than we thought over the past several years, so that's good, but worse than we thought in the past few months.
ZANDI: If you kind of take a step back from all of that, it's pretty clear that the construction sector broadly is adding pretty solidly to economic growth.
ARNOLD: But Zandi says actually a much bigger mistake than this data snafu is the government's decision to spend less money gathering economic data in recent years. More economists are saying the government's current approach doesn't do a good enough job tracking newer industries, such as information technology.
ZANDI: This revision in the grand scheme of things, no big deal. But, you know, you put it together with the fact that we're spending less on collecting data in a time when it is more and more important - doesn't make a whole lot of sense. We have the largest economy on the planet. If we can't get good data, we can't make good decisions. So we should be investing more in our data, not less.
ARNOLD: Zandi says that's what private companies are doing these days - investing more because they understand the power of good data. Chris Arnold, NPR News.