BLS DAILY REPORT, WEDNESDAY, DECEMBER 11, 1996

RELEASED TODAY:  The Producer Price Index for Finished Goods advanced 
0.4 percent in November, seasonally adjusted.  This followed a 0.4 
percent increase in October and a 0.2 percent rise in September 
....Among finished goods in November, increases in the indexes for 
finished energy goods and for finished goods less foods and energy 
offset a decline in the index for finished consumer foods.  Prices for 
finished goods less foods and energy turned up 0.1 percent after 
falling 0.3 percent in the prior month ....

A Washington Post article (page A1) by Steven Pearlstein, "A Single 
Number Puts the Economy in a New Light," says that the price index has 
a huge effect, and changing it isn't so simple ....When a panel 
reported that the CPI has been overstating the inflation rate for at 
least 25 years, it was something other than a ploy to balance the 
federal budget.  It was an assertion by five of the country's top 
economists that much of what we thought we knew about the U.S. economy 
was just plain wrong.  Stagnant wages, lagging productivity, 
lackluster economic growth, a looming Social Security crisis -- 
suddenly, all these anxieties looked like they could be made to 
disappear with the wave of a statistical magic wand ....The CPI is 
embedded in nearly every important measure that we have of the economy 
....The reason is relatively straightforward.  To make economic 
comparisons across time, we need some device -- call it a deflator -- 
to put things on a consistent scale ....Pearlstein gives examples of 
two sets of improbable scenarios -- one derived from downwardly 
revising the CPI and the other from believing in the current CPI -- 
and suggestions from several economists ....He says that some 
economists point out that one reason we find ourselves in the midst of 
this somewhat technical statistical muddle is that the CPI is being 
used as something for which it was never intended -- namely, a 
cost-of-living index.  All of the blind spots within the CPI have been 
well known for many years.  But, fixing them requires bringing in all 
sort of subjective judgments that economists are not uniquely 
qualified to make ....

A Washington Post editorial, "The President and the COLAs," calls on 
the President to announce his support for a reduction in the annual 
cost-of-living adjustments that cause Social Security benefits to move 
marginally up each year while holding income taxes down ....One 
paragraph says, "He ought to add that, in the process, we should 
neither tamper nor appear to be tampering with the consumer price 
index or any other measure of inflation published by the government. 
 The official inflation estimate should neither be, nor be suspected 
of being, the result of political pressure or political decrees. 
 Rather than lean on the Bureau of Labor Statistics to change the 
measure and take the heat, we should have the courage ourselves to 
make more selective use of it and defend what would be our altogether 
defensible decision to the voters ...."

Writing on the op.ed. page of the Washington Post, Robert J. Samuelson 
in "Starbucks and the CPI" says that a flawed index makes it harder 
for us to read the past and plan for the future ....Samuelson writes 
that the "reaction to the report has predictably focused on the budget 
....But the Boskin report's larger significance is that it demolishes 
the theory that living standards have stagnated" .....He also says, 
"The fact that the CPI isn't perfect doesn't mean that it can be 
instantly improved.  No single statistic will ever exactly measure 
inflation, because there are too many products whose prices change too 
often and whose quality variations -- for worse as well as better -- 
can never be completely counted."  BLS "disputes some of the 
commission estimates; there's room for disagreement.  The worst 
response to the report would be for the White House and Congress to 
pressure the BLS to alter the CPI.  The BLS is studying improvements, 
but if it's stampeded into adopting only those that lower inflation, 
we could end up with a less useful indictor -- one, for example, that 
masks some price increases ....Slashing the adjustment at least 0.5 
percentage points (say, from 3 percent to 2.5 percent) is justified 
for five years until we see how the BLS alters the CPI ...."

In a series of articles in the October issue of the Monthly Labor 
Review, BLS analysts provide demographic and economic profiles of four 
types of alternative job arrangements:  independent contractors, 
temporary-help-agency workers, contract-company workers, and on-call 
workers.  One article, by BLS economist Sharon R. Cohany, describes 
each of the arrangements in detail, offering definitions as well as 
estimates of workers in each category.  BLS plans to update its 
information on contingent work and alternative jobs by conducting 
another survey in February 1997, says bureau economist Thomas Nardone. 
 He says it remains to be seen how often the survey will be done, as 
it depends in part on results of next year's polling ....(Daily Labor 
Report, pages 1,A-10,E-3).

The most up-to-date national figures on job-related illnesses and 
injuries will be delayed from their scheduled annual release in 
December to March 1997, partly because of disruptions caused earlier 
this year by government furloughs and shutdowns, BLS officials told 
BNA.  Those disruptions occurred as BLS and the states were collecting 
the data for injuries and illnesses suffered in 1995, according to 
William Weber, BLS's acting assistant commissioner of occupational 
safety and health.  The delay will mean BLS will be releasing its 
survey results in 1997 as much as two years after the injuries and 
illnesses occurred ....BLS officials said the government shutdowns and 
furloughs postponed the survey approximately one month, but that the 
bureau's own systems development improvements are also partly to blame 
for the delay ....(Daily Labor Report, page A-10).

A chart using BLS figures on repetitive stress injuries is featured in 
an article on the possible effect of a New York jury's award of 
damages to three women who said they were injured by repeatedly using 
their computer keyboards (Washington Post, page C13).

The country's purchasing executives are optimistic about the economy 
for 1997 with expectations of higher revenues compared with 1996 and 
optimistic forecasts on manufacturing employment, the National 
Association of Purchasing Management announced ....(Daily Labor 
Report, page A-11).

Relatively high spending on education is paying off in the United 
States, but the disparities between the highly educated and the poorly 
educated remain high, according to an educational survey by the OECD 
....With more than 32 percent of the population finishing at least one 
stage of higher education, the U.S. ranks second across the OECD, 
trailing only Canada in the overall university attendance rate.  Even 
more importantly, university graduates in the U.S. make the transition 
to full-time work faster than in other OECD countries and are less 
likely to be unemployed later in life ....(Daily Labor Report, page 
A-3).

Joseph E. Stiglitz, chairman of the White House Council of Economic 
Advisers, has told President Clinton that he is leaving the 
administration to become the top economist at the World Bank 
....(Washington Post, page C14; New York Times, page D2).

DUE OUT TOMORROW:
Consumer Price Index -- November 1996
Real Earning:  November 1996


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