Overhaul Of Economic Data Gathering Urged Nation Is Flying Blind, Economists Charge; They Call For Reorganization Of Agencies That Gather And Interpret Economic Statistics

Warning that the country risks flying in an economic fog with the radar turned off, a group of leading corporate economists urged President Clinton on Monday to overhaul the government’s crunching of economic numbers.

Stressing the importance of accurate statistics to the lives of consumers and taxpayers, the National Association of Business Economists asked Clinton to consolidate the government’s three main statistical agencies into a single high-level office.

The new agency - a combination of the Labor Department’s Bureau of Labor Statistics and the Commerce Department’s Bureau of the Census and Bureau of Economic Analysis - would be headed by a statistician general of the United States, who would serve a seven-year term and be removable only for cause.

The recommendation from the 3,200-member association, whose roster includes economists working for the nation’s biggest corporations, comes amid growing concern about the quality of federal economic statistics.

In December, a congressional commission said the Consumer Price Index overstates annual increases in the cost of living by 1.1 percentage points. If uncorrected, that would increase the federal deficit $1 trillion over 12 years by overpaying Social Security and other federal benefit recipients and undercharging taxpayers.

More generally, years of chronic underfunding has resulted in “a system that does a better job of measuring the industrial economy of the past than the information economy of the present,” said the association’s president, economist C. Mark Dadd of AT&T Corp. Services and high-tech industries are not well measured.

That’s critical, the association said, because Congress and the White House use the statistics in making tax and spending decisions, the Federal Reserve uses them in setting interest rates and private businesses use them in deciding how much to produce, how much to pay employees and where and when to invest.

“If the nation figuratively flies into the economic fog with the radar turned off, the risk of policy errors would rise,” Dadd said. “Those most likely to be hurt would be consumers and taxpayers of moderate means.”

Maurine A. Haver of Haver Analytics, chairwoman of the association’s statistics committee, said the 1990-91 recession might have been avoided if the Commerce Department hadn’t been mistakenly reporting moderately strong economic growth in 1989. The Federal Reserve could have revived growth by cutting interest rates much more quickly and steeply than it did, she said.

More money would help government agencies produce better statistics, Haver said. For instance, the Bureau of Economic Statistics uses the same type of computer system that General Electric discarded in 1972. But, the economists’ association is recommending the consolidation to reduce bureaucracy and overhead expenses.

It asked Clinton to appoint a commission that would draft legislation within six months.

Everett Ehrlich, undersecretary of Commerce for economic affairs, said consolidation of the agencies is worth considering but warned it would produce far less savings than advocates expect.

“There’s no way to organize ourselves around the absence of money,” he said. “The economy is growing and changing rapidly and the resources we’re providing to measure it are stagnant. As a result, we’re falling behind.”

He said the dispute over the Consumer Price Index was “a mine shaft canary … the first sign that we’re not keeping up.”