(C) Reuters. Reliability of U.S. Economic Data Could Take Hit From Virus
(Bloomberg) — The coronavirus outbreak stands to wreak havoc not just on the U.S. economy, but also on the ability of statistical agencies to produce reliable figures on key data including jobs and inflation.
Americans may be reluctant to agree to an in-person interview on their employment status with a government worker. Stretched businesses might decide to skip responding to the voluntary payrolls survey. Data collectors checking consumer prices could find stores shuttered or shelves cleaned out. Economists who compile the reports may have difficulty accessing their regular computing tools from home.
These are the kinds of potential challenges in store for the Bureau of Labor Statistics, the Census Bureau and the Bureau of Economic Analysis, according to former top officials. Multiplied many times over, it means the disease could depress response rates and sample sizes for the budget-constrained agencies, adding more uncertainty to the figures policy makers and businesses are using to gauge the economic impact of the coronavirus.
It’s unclear how much the coronavirus will ultimately impact businesses and the economy, and its severity will determine if or to what extent the economic data are affected.
“Because the sample sizes are pretty much down to the minimum, disruption in collecting data is probably going to add a bit to the uncertainty in the data,” said Keith Hall, a former BLS commissioner who served from 2008 to 2012. For policy makers, that “makes it a little harder to see exactly what you’re dealing with.”
Amid decreasing response rates, especially with household surveys, the agencies’ tasks have become increasingly challenging and more expensive given the extra follow-up required. While costs of collecting the data have increased, budgets have largely stagnated, fallen short of requests or even declined, leading to smaller sample sizes in some cases.
BLS — the home of widely watched reports on employment and consumer prices — will continue operations as normal but is “keeping careful watch” on guidance from the Centers for Disease Control and Prevention and “will communicate any changes in operations if these restrictions begin to affect BLS collection or publishing efforts,” spokesperson Stacey Standish said in an email Monday.
Pandemic Procedures
The Census Bureau, which compiles data on retail sales, home construction and factory orders, and also conducts the decennial census, said in a statement: “Operations for the 2020 Census and our ongoing household surveys have procedures built in that specifically anticipate epidemics and pandemics, and we will continue to work with the relevant authorities to keep those up to date.”
The Commerce Department said in a statement that it has a contingency plan to ensure the BEA — which puts out gross domestic product and consumer spending — can continue operating during a pandemic.
The virus’s impact will depend on the report. Agencies collect data in a variety of ways — in person, by phone, by mail from other data sources — to measure the country’s employment, spending, prices and more.
For example, the widely-watched employment report is made up of two separate voluntary surveys.
The household survey, which feeds into statistics on unemployment and labor-force participation, is conducted by the Census Bureau through a combination of in-person and phone interviews, covering about 60,000 households each month. Over the past decade, the response rate for that survey has already dropped by almost 9 percentage points.
Voluntary Survey
The establishment survey, which informs statistics such as payrolls, wages and hours worked, relies on voluntary responses from about 145,000 businesses and government agencies.
“If companies feel strained and have people out, they can easily bail on providing the data,” Hall said. “It takes two to do the data collection.”
Another question is whether staff members of the agencies will be affected, said Erica Groshen, who was BLS commissioner from 2013 to 2017.
“The agencies wouldn’t want to be putting their staff at risk” for the disease or for spreading it, Groshen said.
Even if the data can be collected as normal, the many steps to make sure the data are accurate and prepare them for analysis are typically done in the office, said Robert Groves, who served as director of the Census Bureau from 2009 to 2012.
“This will be a stress test of the computing platforms and the computer infrastructure of those agencies,” Groves said.
Any disruptions could prove challenging for the BEA, which relies on data collected by the BLS and the Census Bureau.
Harder Job
“Their job will be made much harder by trying to put together various sources that may be a little bit less reliable in one particular quarter or come in later than they normally do because of disruptions,” Groshen said.
The virus could also impact the decennial census. Data collected in the coming months will determine the allocation of hundreds of billions of dollars in federal funding over the next 10 years as well as the number of seats each state has in Congress.
In 2010, about two-thirds of the country responded to the survey without an in-person follow-up. The process of following up with civilians in person may prove more challenging if the coronavirus continues to spread — though it’s possible some Americans staying home might also be more likely to respond.
“For the first time in our lives, people may view surveys as a form of entertainment,” Groves said.