The Bureau of Labor Statistics announced that it is terminating its export price program. This cut is particularly troubling for several reasons:
- Export (and import) prices are used to compute real GDP, our system of national accounts, and performance measures such as productivity. The President, the Federal Reserve System, and Congress base policy decisions on developments in real GDP, income, and productivity. It is highly unusual for a statistical agency to cut a so-called principal federal economic indicator.
- Exports account for a large (13 percent) and growing share of the U.S. economy. Today more than ever, accurate measurement of export prices is critical to the accurate measurement of real GDP and productivity.
- There is no good substitute for the export price program, which is unique in surveying exporters and constructing trade-specific price indexes.
Cuts like those to the export price program are insidious. Key economic indicators such as GDP and productivity measures are still published, but their accuracy is undermined and users are rarely aware of any decline in quality.
The termination of the BLS export price program is emblematic of deeper issues at statistical agencies. The growth of international trade and the integration of world economies present enormous challenges to measuring economic activity within the United States. But with tight budgets, agencies struggle to maintain existing programs and largely fail to implement improvements that would address new problems arising from globalization. The current budget situation threatens the integrity of the U.S. statistical system, which all economists and policymakers rely on.