There was no report Weds. and this double issue today. I have never
seen this before. Hmmmm ....
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BLS DAILY REPORT, WEDNESDAY AND THURSDAY, DECEMBER 4-5, 1996
RELEASED ON THURSDAY: Revised annual rates of productivity changes in
the third quarter were: 0.0 percent in the business sector; -0.3
percent in the nonfarm business sector; and 6.3 percent in
manufacturing. In the business sector, productivity was unchanged as
a 2.1 percent output increase was accompanied by a nearly equal
increase (2.0 percent) in the hours of all persons engaged in the
sector. Similarly, labor productivity in the nonfarm business sector
fell as hours of all persons rose 2.1 percent, but output grew only
1.8 percent. In manufacturing, output rose at a 5.6 percent rate, and
hours fell 0.7 percent ....
The U.S. economic landscape remained largely unchanged in November,
with the Federal Reserve's 12 district banks generally reporting
moderate growth and tight labor markets, but no generalized wage gains
and still stable prices ....(Daily Labor Report, Dec. 5, page D-1;
Washington Post, page D2).
Index of forward-looking economic indicators edged up 0.1 percent in
October, its ninth straight monthly gain, the Conference Board reports
....(Daily Labor Report, Dec. 4, page D-1; Washington Post, page F2).
This week's "Trendlines" in the Washington Post, is "Fine-Tuning a
Leading Index," which says, "One easily calculated number, the spread
between interest rates charged on overnight loans and yields on
10-year U.S. Treasury notes, has considerable power to predict
economic growth." On Dec 30, "that spread officially becomes one of
the components of the index of leading economic indicators. When the
yield on the notes is well above overnight rates, growth is likely to
be healthy. When the spread turns negative, recession often follows
...."
The median wage increase due in 1997 under contracts negotiated in
earlier years -- 3 percent -- is the same deferred median reported for
1996, data compiled by BNA show ....(Daily Labor Report, Dec. 4, pages
2,D-2).
Though working families are saving one-third more towards retirement
than they were two years ago, it may be too late for older workers,
says a survey sponsored by the Employers Council on Flexible
Compensation and Colonial Life & Accident Insurance Company ....(Daily
Labor Report, Dec. 4, page A-6)_____Working Americans are saving more
for retirement, but not nearly enough to achieve the income they want,
a Marketing Research Institute survey found ....(Washington Post, page
F1).
A Washington Post (Dec. 4) op-ed page column, "The Squeeze on
Statistics," by Robert J. Samuelson, says that accurate numbers are
society's eyes and ears. We can't afford not to know them ....
CPI REPORTS FROM WEDNESDAY
Anticipating the release of a Senate commission report likely to say
the CPI overstates inflation, BLS Commissioner Abraham lists the steps
the agency has taken already to adjust for an upward bias in the
measure ....The most significant revision Abraham mentions will take
effect with the February 1998 release of January 1998 price data.
Every 10 years, BLS comprehensively updates its marketbasket of goods
and services. In this revision, 1993-95 consumer spending patterns
will replace 1982-85 patterns. Additionally, BLS updates each year,
on a rotating basis, 20 percent of the goods and services priced for
the index. "We have estimated that updating weights may reduce
measured inflation by 0.1 percent or 0.2 percent per year," Abraham
says ....(Daily Labor Report, pages 1,AA-1,E-4).
Five-member panel of economists will tell Congress that the CPI
overstates inflation by 1.1 percent, according to sources ....(Daily
Labor Report, page AA-2).
The Clinton administration signaled its willingness to consider
proposals to significantly scale back the annual cost-of-living
adjustment used to set payments for federal benefit programs and
determine income tax brackets for hundreds of millions of Americans.
Senate Republicans also expressed interest in the idea, but make it
clear they would not move on any proposal without ironclad assurances
of White House support because of the political volatility of the
issue ....At a press briefing on some of the technical issues likely
to be raised in the commission's report, Commissioner of Labor
Statistics Katharine G. Abraham said she had not received a copy and
declined to comment on what changes in the CPI it might recommend.
Abraham acknowledged that the CPI is not a "perfect" measure of
changes in the cost of living because it does not take into account
how consumers change their buying behavior when prices of some goods
and services rise more rapidly than others. That shortcoming means
there is an upward bias in the CPI, she acknowledged, but she said the
extent of that bias is not known. If Clinton officials are genuinely
interested in encouraging a broad debate about the accuracy of the
CPI, one difficulty will be figuring out a way to do it so that it
does not appear to put pressure on or imply criticism of the
economists at the BLS ....(Washington Post, page F1).
CPI REPORTS FROM THURSDAY
The Advisory Commission To Study the Consumer Price Index proposes
that the federal government create a new inflation measure that is
closer to a "true cost-of-living" index. In the final report of the
panel chaired by Michael Boskin, the group also finds that the current
CPI overstates inflation by about 1.1 percentage points a year, a
finding that caps a two-year effort to review the price measure's
accuracy. The commission makes separate recommendations to BLS and to
Congress and the president on how to deal with concerns over the CPI.
Lawmakers say they want to deal with the issues as they relate to tax
indexing; now Congress and the Clinton administration must grapple
with the budget implications of the panel's recommendations. A
special report by BNA looks at several sides of the CPI debate: the
Boskin panel's findings, policy implications, changes the BLS has
already made to the index and is planning, and reaction of private
data users to the debate ....(Daily Labor Report, page 1).
The panel finds that the government has been overestimating inflation
for years ....Fixing that arcane statistical mistake, as urged by the
group, would raise tax payments, slow the rise in federal benefits,
and ripple in many other ways through the economic lives of millions
of Americans in coming years. But not all experts agree on the
details of the alleged mistake, or on the desirability of fixing it as
the panel proposed, or on changing the index so as to reduce the
annual cost-of-living adjustments to Social Security benefits, tax
schedules, and more ....Some of the panel's recommendations were
immediately challenged by officials at BLS ....BLS Commissioner
Abraham questioned the commission's detailed proposals for dealing
with the substitution problems ... in a statement ....(Washington
Post, page A1).
A Washington Post editorial, "The Inflation Rate, the Budget ... ,"
ends with this paragraph: "Back to the president and Congress. The
last thing they can want to do is order the BLS to publish a statistic
it doesn't believe in. The inflation rate ought not be the result of
a political decree. Flog the agency to try to improve the index, yes;
put pressure or even the hint of pressure on it to reach a particular
result, no. And no index is ever going to be a silver bullet or a
substitute for political judgment and will. The advisory panel may
well be right. It's a serious group that has made a serious
contribution. But if the politicians think on this or some other
basis that the current system of annual adjustments is too generous,
they need finally to be the ones to step up and ratchet it back. They
can make whatever arguments they like, but they must be the ones to
take the responsibility. We hope they do."
Economists' endorsement of lowering the consumer price index boosts
the chances of a balanced budget deal ....(Washington Post, page D1).
DUE OUT TOMORROW: The Employment Situation: November 1996
MORE CPI STORIES TOMORROW
