BLS DAILY REPORT, WEDNESDAY, DECEMBER 24, 1997:
New orders for manufactured durable goods jumped 4.8 percent to $195
billion in November, with heightened demand for transportation equipment
leading the advance, the Commerce Department reports. When
transportation equipment is removed from the calculations, durable goods
orders decreased 0.2 percent, for its second monthly decline. Demand
for durables has increased in 5 of the last 6 months, and in the year to
date new orders are 7 percent greater than in the same period last year
(Daily Labor Report, page D-1; The Washington Post, page C1).
__The New York Times (page D3) says that more evidence of slackening
economic growth emerged today, even as the government reported that
orders for relatively costly factory goods posted the biggest gain in
almost 5 years in November. The surge in orders was concentrated in
commercial aircraft and military hardware, produced over extended
periods. The chief economist for Merrill Lynch said the November
decline in orders for capital goods (machinery used in production, about
half of which is sold abroad) "may be among the first signs that the
Asian crisis is hitting home."
The experimental geometric mean version of the CPI kept to pattern in
its divergence from the CPI-U, rising 1.6 percent in the year ending in
November, according to BLS data. The official CPI-U rose 1.8 percent in
the same period. BLS is testing the experimental geometric mean CPI
(called the CPI-XG) against another experimental index that uses the
same arithmetic average method of calculating price changes as the
CPI-U, but recalculates it to make a more suitable comparison with the
geometric mean index. The differences between the two experimental
indexes has converged in October to about 0.3 percentage point, about
what BLS expected (Daily Labor Report, page A-10).
U.S. economic growth in the third quarter was 3.1 percent at an annual
rate, a little slower than previously reported, the Commerce Department
says. Consumer spending increased 5.5 percent in the third quarter,
after rising just 0.9 percent in the second. "Inflation remains
invisible," said a Merrill Lynch senior economist, noting that the
chain-weight price index for domestic purchases edged up only 1.3
percent in the third quarter (Daily Labor Report, page D-3; The
Washington Post, page C1).
For years, the government's economic statistics have been attacked as
out of touch with today's economy. And no wonder - all the official
employment data and other economic numbers have been collected,
according to the Standard Industrial Classification, or SIC, a system
that originated in the 1930s, and looks it. It was easy to find
employment data for 31 different apparel industries. Meanwhile, the
entire shrink-wrapped software industry was squished into one category.
Now, starting with the 1997 Economic Census, which is being mailed to 5
million companies, the government is switching to a new way of
classifying industries. Called the North American Industry
Classification System (NAICS) it includes information on more than 300
new industries, from satellite communications to casinos to nail salons,
while grouping new and existing industries into more useful sectors.
Eventually, virtually all official data - employment, wages, sales,
capital investment, profits - will be available for the new sectors and
industries. This major revision will put a tremendous burden on the
government's statistical agencies, already hampered by tight budgets.
The first NAICS data won't appear until early 1999 and won't be fully
integrated into the federal statistics until 2004 at the earliest.
Moreover, the difference between old SIC and new NAICS industries is so
great that many historical comparisons will become difficult to make.
But such disruptions are the price to be paid for a clearer picture of
the new information-driven economy (Business Week, December 29, page
42).
The Business Outlook of Business Week, December 29, page 74, reports
that a cooldown - not a recession - is in the forecast. But the big
unknown is still Asia. Business Week expects the U.S. economy to grow
2.4 percent next year, measured by fourth-quarter to fourth-quarter
growth in real gross domestic product, and consumer inflation to edge up
only to about 2.5 percent, as a pickup in service prices offsets a
continued decline in goods inflation. And after the unemployment rate
declines slightly from November's 24-year low of 4.6 percent, we look
for joblessness to rise to 4.8 percent by yearend, amid slower growth..
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