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The most important statistic released last week was the unemployment rate. After dropping from 5.6% in March to 5.4% in April, it bounced back to 5.6% in May, leaving economists mystified about the trend. While the jobless rate is generally considered to be among the most accurate of the figures the Government puts out, economists argue over how to interpret the number. A 5.6% unemployment rate sounds fairly bad in an absolute sense, but some experts say that it overstates the degree of distress because a large number of those listed as out of work are people who are voluntarily moving from one job to another. According to this line of reasoning, 5.6% unemployment is actually close to "full employment," and any attempt to push the rate much lower will cause inflation to accelerate. Other analysts say the unemployment rate understates the problem because it does not include the so-called discouraged workers, who have given up looking for a job.
One of the most volatile statistics is the monthly report on the U.S. trade deficit. That figure jumped from $12.4 billion in January to $13.8 billion in | February, only to plunge to $9.7 billion in March. Part of the reason for such swings is that trade flows vary according to seasonal patterns. When the Commerce Department announces the April figure next week, the number will be "seasonally adjusted" in an attempt to smooth out temporary fluctuations.
While the Government is striving to improve statistical accuracy, the effort has been repeatedly undermined by budget constraints. Federal funding for the compiling of statistics has fallen from $1.7 billion in 1980 to $1.6 billion in 1987, even though the cost of gathering data has gone up. The Administration wants more money for the job, but as Congress struggles to shrink the budget deficit by cutting spending, the chances seem slim that something as unglamorous as statistics will survive the ax.
That disturbs the experts who rely so heavily on Government data. Says Thomas Juster, an economics professor at the University of Michigan: "This kind of activity doesn't involve a major cost. It's a small-potatoes operation in terms of what the Federal Government does. But it also doesn't have any political attraction to the general public." Complains Henry Kaufman, the famed financial forecaster and former chief economist of Salomon Brothers: "The Government has not given a high enough priority to improving the quality of compiling economic data. We really do not cherish people who are in the business of collecting statistics." Unless funding is increased, the Government may find it necessary to eliminate some of its statistical measures -- and business planners will have even fewer stars to fly by.