Institutional Framework for Economic Statistics in Decentralized System J. Steven Landefeld Director Friends of the Chair Group on Integrated Economic Statistics, Work Group Meeting June 6-8, 2007

2 How Do Things Get Done in A Decentralized System?  The U.S. system produces a set of statistics that pretty well reflects what the U.S. public wants:  Timely data that answers the “big picture” questions, gets the answer “about right,” and doesn’t ask “too much” information from respondents

3 How Do Things Get Done in A Decentralized System?  The system achieves this through:  Coordination of selected infrastructure issues  Strong degree of independence of major statistical agencies  Working with and listening very carefully to customers (balancing needs of all customers)  Responding to these customers by  Specializing and coordinating across agencies in research, innovation, and implementation in the development of new measures for these customers.

4 Role of the Chief Statistician & Inter-Agency Council on Statistical Policy (ICSP)  Infrastructure  Education – JPSM  Best practices – OMB Quality and Documentation Standards  Principles for statistical agencies  Confidentiality, Independence, Professionalism  Common data dissemination – FEDSTATS  Classification systems – NAICS, NAPS, Regional  Standards and Guidelines for: Data releases, survey response rates, and accuracy

5 Role of Chief Statistician & ICSP  Integration  Forms review – avoid duplication, minimize response burden  Cross cutting budget review  Data sharing – CIPSEA and IITSA

6 Role of Federal Economic Statistics Advisory Committee  Review of Cross cutting BEA, BLS and Census issues  Recommendations for improvements, including:  Expansion of payroll survey  Development of time use survey  Development of financial services prices

7 Role of Intra-Agency Coordination  BEA/BLS  PPI expansion for services, export-import prices, new non- residential construction process, and integration of BEA-BLS employment and productivity data  BEA/Census  Domestic services data expansion and assistance on international services sample frame  BEA/FRB  Stock options, pensions, LAN prices and integration of Flow of Funds and NIPAs.  BEA/FRB/Treasury  Derivatives, short-term instruments, and tax havens

8 Professional Associations & Interest Groups  BEA/NABE  chain and hedonic indexes, more timely regional and industry data, NAICS time series  BEA/Coalition of Services Industries  expanded detail on international trade in services  BEA/NBER-CRIW  Multinational Corporations, capital stock and deprecation, prices for new goods and services, medical care, intangibles and integration  BEA/AEA  “New Economy,” “off-shoring”, corporate profits and medical care  BEA/ACCRA/AUBER  more timely, detailed, comprehensive regional data

9 Role of BEA Advisory Committee  Blue ribbon panel of academics and business leaders  Recommendations carry weight beyond BEA  Key role in all BEA and related system-wide improvements in recent years  Integration efforts across agencies  Capitalization of R&D  Better measurement of health care expenditures

10 Role of Other Government Agencies  Federal Reserve Board, President’s Council of Economic Advisors, Treasury, Congressional Budget Office and others  Important for filling “gaps” where there is no constituency:  Data sharing, services expansion, chain indexes, and international capital flows

11 What works in the Decentralized System  Resulting system good at providing timely measures on issues of interest to public and private decision makers:  Rich set of monthly current indicators  Timely quarterly GDP accounts data on key issues of relevance to policymakers  Regularly updated measures to reflect changes in the economy.  “Big Picture” accuracy through innovation and the adoption chain indexes, hedonic measures, and other quantitatively important new methods.

12 What Are the Challenges?  Challenges associated with decentralized system:  Providing consistent and well integrated data  Developing measures on issues/areas with no constituency and Federal agency management  Challenges for all systems:  Lack of well established conceptual foundation and organizational framework (true of all national accounts)