WASHINGTON - Sounding an alarm that economic policymakers need better statistics, Fed Vice Chairman Alan S. Blinder said the government's data collection agencies have their prioities wrong.
"I and many others would prefer to see more direct measures of activity such as health, business, and financial services," he said Tuesday at a symposium sponsored by the U.S. Chamber of Commerce.
"These are among the things policymakers need to know more about when we confront questions such as how fast the economy can grow and how much economic slack exists," he added.
Though data problems "are probably a very minor source of poor economic policy," Mr. Blinder said, "they are also the easiest to fix - so society should be eager to do so."
Collection of agriculture and mining data is ripe for review, he observed. These areas consume 25% of the funding for economic statistics even though they each account for only 2% of real GDP.
"I believe we should ask whether a reallocation is in order - a reallocation that could, for example, help fill in some of the huge gaps in our understanding of the service-producing sector and in the coverage of international transactions," he said.
The service sector accounts for two-thirds of all jobs. Yet the government lacks any comprehensive statistical reviews of the sector, he said, reiterating his call for more work in the area.
Mr. Blinder said that users of government economic statistics must push for "sensible budgets" for the data collection agencies. Users also need to tell the agencies how to reallocate their resources.
"If we avoid making the hard choices, we run the risk that changes in the functioning of our dynamic economy will grotesquely outpace changes in our statistical programs," he said.
That would force policymakers to make monetary decisions on incomplete data, a process that could have "very real" social costs, he said.
Mr. Blinder also questioned the government's emphasis on manufacturing data, saying that sector accounts for less than a third of the country's real output.
"With service-producing industries accounting for so much economic activity, we might be misled by extrapolating to the whole economy developments we observe in the goods-producing industries," he said.
Mr. Blinder praised the economic data collection agencies for eliminating some of the most unreliable components of different statistical surveys. That should improve accuracy, he said.
Those improvements include use of Canadian data to better capture northbound shipments and creation of a new annual capital expenditure survey.
And he said the economic data collection agencies should conduct more basic research into how best to compute real GDP.