BLS DAILY REPORT, WEDNESDAY, MARCH 19, 1997
RELEASED TODAY:
CPI -- On a seasonally adjusted basis, the CPI-U rose 0.3 percent
in February, following an increase of 0.1 percent in January. The
food index, which declined 0.3 percent in January, advanced 0.3
percent in February ....The energy index -- up 0.3 percent in February
-- continued to increase, but by less than in recent months
....Excluding food and energy, the CPI rose 0.2 percent. This
compares with a 0.1 percent rise in January, but was the same as the
average monthly increase in all of 1996 ....
REAL EARNINGS -- Real average weekly earnings increased by 2.4
percent from January to February after seasonal adjustment. This gain
was due to a 2.3 percent rise in average weekly hours and a 0.2
percent increase in average hourly earnings. These gains were
partially offset by a 0.2 percent rise in the CPI-W ....From February
1996 to February 1997, real average weekly earnings grew by 1.9
percent ....
Most of the regions of the United States and about half of the states
saw their labor markets improve modestly during 1996, according to
data released by BLS. Unemployment rates declined last year in 24
states and the District of Columbia, with the national jobless rate
averaging 5.4 percent compared with 5.6 percent in 1995. The Midwest
maintained the lowest unemployment rate of any region for the sixth
straight year. The West reported the highest jobless rate of any
region for the fifth straight year. Both California and Alaska had
rates that averaged more than 7 percent last year ....(Daily Labor
Report, page D-3).
The Wall Street Journal's Letters to the Editor column includes a
letter by Commissioner of Labor Statistics Katharine G. Abraham that
points out that the "March 3 Credit Markets article ('Morgan Stanley
Economist, Bucking the Trend, Says He is Convinced CPI Understates
Inflation'} has resulted in numerous inquiries to the Bureau of Labor
Statistics (BLS) from readers who were left with the mistaken
impression that the BLS determines the monthly change in the owners'
equivalent rent component of the Consumer Price Index (CPI) by 'asking
homeowners how much they believe they could rent their house for.'
The CPI price movement for homeowners is not, and has never been,
calculated based on changes over time in owners' estimates of the
amounts for which their homes could be rented. Rather, the change in
the owners' equivalent rent index is determined by actual reported
rents for rental properties that are determined to be the best match
to owner-occupied units. Homeowner estimates of rental value are used
only for weighting purposes, not in the measurement of price change."
The Washington Post's op.-ed. page contains two columns critical of
the president's decision that "he would not endorse the proposal for a
blue-ribbon commission to recalculate the consumer price index"
....The first is "Caving on the Consumer Price Index" by David S.
Broder ....The second is "A Cautious Compromise" by Robert J.
Samuelson. Samuelson says, "I think that the way out is for Congress
to cut the CPI 0.5 percent for indexing. If the CPI rose 3.3 percent,
everything indexed to it would rise only 2.8 percent. This seems a
cautious compromise between what we know (that the CPI now overstates
inflation) and what we don't (the exact size of the overstatement).
Numbers aside, the issue is not just an accounting dispute. Flawed
indexing feeds budget deficits and silently twists the government's
priorities ....Because no one ... has had the courage to demystify it,
the whole subject has become needlessly symbolic and charged. People
wrongly think that altering the index formula would impose huge
hardships. It wouldn't ....But because many people are affected -- on
both taxes and benefits -- the impact on the budget can be significant
....We often are told that the CPI is a technical issue and that any
change should be left to the Bureau of Labor Statistics. Well, the
CPI should be left to the BLS; and the agency should be given the
money to improve the CPI. But how the index is used for the budget is
inevitably a political matter ....We can't wait for the BLS to
construct a perfect cost-of-living index, because it won't ever
happen. The job is too hard ...."
Construction of new homes and apartments shot up 12.2 percent in
February to a three-year high, with gains posted in all regions of the
country except the Northeast ....(Daily Labor Report, page D-1; New
York Times, page D4; Washington Times, page B6)
Bankruptcy filings reached an all-time high in 1996, the
Administrative Office of the U.S. Courts said ....(Washington Times,
page B6).
Alexis M. Herman defends her record of public service in answers to
questions put forth during a hearing convened to consider whether she
is qualified to be the next secretary of labor. Sen. Jeffords,
chairman of the Labor and Human Resources Committee, suggests there
will be no snags in the confirmation process, telling Herman he looks
forward to working with her ....(Daily Labor Report, page
AA-1)_____Senators go easy on Labor nominee ....(Washington Post, page
C9;
Wall Street Journal, page A20).
The Senate Banking Committee approved the nomination of economist
Jeffrey Frankel to join the CEA. Frankel, a foreign exchange
specialist, was named to replace Martin Bailey, who left the CEA to
join a consulting firm. Frankel's appointment is subject to Senate
confirmation (Washington Post, page C16).
DUE OUT TOMORROW: Mass Layoffs in December 1996
