STATISTICS: Figures Can Lie

For 17 years, the Federal Reserve Board's index has been the authoritative barometer of U.S. industrial production. In peacetime, many a U.S. businessman eagerly scanned the index's monthly rise—or fall—shifted his financial position accordingly. Many a financial house bases its carefully computed private index on that of FRB. Last week, FRB admitted, with tremendous dignity, that for two years its index has been inaccurate.

FRB had a simple explanation. Skyrocketing war production knocked peacetime measuring sticks into the statistical ashcan. Example: the chemical industry. In peacetime, chemical production weighs little in...

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