NABE Archives - Colorado-based Business and Economic Research

Business and government leaders in the U.S. are fortunate to have a wealth of statistical data to guide their policy decisions. For the most part, the programs that produce the data have integrity and they try to provide the best data possible.

Periodically, Congress attempts to eliminate some of the federal government statistical agencies. On May 17th, the National Association of Business Economists distributed emails to members and friends discussing the latest attempt by Congress to reduce funding for key data programs.

While government doesn’t need a blank check to collect information, the data that will allegedly be eliminated is valuable in the decision-making process. Hopefully Congress will find a fund collection and production of the data in an efficient and cost effective manner.

See the NABE communiqué below.

Dear NABE Members and Friends:

Last week, we alerted you that the U.S. House of Representatives was considering an appropriations bill for Commerce, Justice, Science, and Related Agencies (H.R. 5326) that would drastically reduce funding for the Census Bureau and make participation in the American Community Survey voluntary. Thanks to the many NABE members and other data users who contacted their representatives to try to prevent this action. Regrettably, the legislation ultimately passed the House along party lines and was much more damaging than originally proposed. In its current form, H.R. 5326 will “devastate” the nation’s economic statistics.

Specifically, the legislation will:
•Terminate the American Community Survey;
•Cancel the 2012 Economic Census; and
•Halt development of cost-saving measures for the decennial census.

NEXT STEPS:

The Senate is expected to take up its own FY2013 Commerce, Justice, Science, and Related Agencies appropriations bill shortly. The Senate and House versions of the bill will then presumably be addressed by a conference committee comprised of members of both bodies.

HOW YOU CAN HELP:

Call or email your senators and representative today to tell them why you value the Economic Census and the American Community Survey. You can use this sample letter below:

Dear(Senator/Representative):

I am writing to express my concern over passage of H.R. 5326 by the U.S. House of Representatives, which would drastically cut funding for the U.S. Census Bureau and eliminate the Economic Census and the American Community Survey (ACS) – two of the most important tools we have for understanding the U.S. economy.

These programs are critically important to businesses, policymakers, and government agencies which use the data to make informed decisions and plan for the future. The increased uncertainty accompanying the loss of these data will most certainly result in more missed opportunities and waste for businesses and misallocation of resources by policymakers and government agencies. I urge you to ensure that the Census Bureau receives adequate funding to continue these vital programs.

How are Economic Census data used?
•By the federal government as an input to calculate elements of key economic indicators, such as economic growth (GDP), prices, and productivity;
•By retailers in evaluating whether to expand into new market geographies;
•By economic development commissions in attracting new businesses to their areas; and
•By companies to benchmark performance against industry averages

How are ACS data used?
•By corporations to examine workforce characteristics of neighborhoods to determine optimal locations for new factories or sales centers;
•By homebuilders looking to tailor new subdivisions to surrounding neighborhoods based on income, family size and existing home values; and
•By municipal governments in planning to meet the educational, safety and housing needs of their citizens.

The information we glean from the Economic Census and the ACS increases our understanding of current economic conditions and reduce uncertainty, allowing businesses and policymakers to make well-informed, efficient decisions.

If we eliminate these programs, we are choosing to “fly blind,” an alarming proposition in these challenging economic times. Again, I urge you that you vote to ensure adequate funding for both the ACS and the Economic Census.

Sincerely,

(Your Name)

The National Association of Business Economists (NABE) released its fall consensus forecast in early October. NABE revised its outlook for output from 3.2% (in May) to 2.6% based on lower than anticipated economic activity during the summer months.

In addition, NABE indicated that modest growth in consumer spending is on tap through 2011. Consumers will remain cautious as a result of continued high unemployment and weak gains in employment. As well, minimal growth is expected in household net worth, i.e. small gains are expected in equity portfolios and home prices

Finally, NABE opined that the downward revision in the forecast reflects “a greater appreciation of the importance of stimulus policies in countering forces holding down the economy’s performance.”

While it is not surprising that NABE lowered its expectations for expansion of the economy, the amount of the decrease is reason for concern. In simplistic terms, the May forecast suggested that the U.S. would see above potential growth this year while the October forecast now says that growth will be well below potential.

Were the NABE panelists overly anxious to see a recovery or did the positive impact of the stimulus package on Q1 Real GDP cause them to be overly optimistic in their May outlook? Clearly panelists missed indicators of the summer slowdown in their May forecast; are there other factors, favorable or unfavorable, that panelists may have missed in their October update?

The revisions in the NABE forecast illustrate the challenges that economists and business researchers face in evaluating and forecasting the performance of the economy. Many of the econometric models that have worked well during periods of growth have proven to have limitations caused by the volatility of the economy over the past decade. This is not intended as criticism, but rather an illustration of the challenge our public and private sector leaders face when they are forced to make decisions without perfect information.

While Colorado is a great place to conduct business, the underlying message from the NABE forecast bodes ill for Coloradans. Lackluster growth at the national level translates into an extended recovery for the Colorado economy, i.e. there will be limited job growth on the horizon.

Tag: NABE

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